Exhibit 10.1
------------
SECOND AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
among
SOLECTRON FUNDING CORPORATION,
as Seller,
SOLECTRON CORPORATION,
individually and as Servicer,
SOLECTRON TECHNOLOGY, INC.,
as a Sub-Servicer
SOLECTRON CALIFORNIA CORPORATION,
as a Sub-Servicer
QUINCY CAPITAL CORPORATION,
as Issuer
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Administrator
Dated as of February 22, 1999
TABLE OF CONTENTS
PAGE
ARTICLE IAMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. Purchase Facility.......................................2
Section 1.2. Making Purchases........................................2
Section 1.3. Purchased Interest Computation..........................4
Section 1.4. Settlement Procedures...................................4
Section 1.5. Fees....................................................7
Section 1.6. Payments and Computations, Etc..........................7
Section 1.7. [intentionally omitted].................................8
Section 1.8. Increased Costs.........................................8
Section 1.9. Additional Discount on Portions of Purchased Interest
Bearing a Eurodollar Rate...............................8
Section 1.10. Requirements of Law.....................................9
Section 1.11. Inability to Determine Eurodollar Rate..................9
ARTICLE II
REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
Section 2.1. Representations and Warranties; Covenants..............10
Section 2.2. Termination Events.....................................10
ARTICLE III
INDEMNIFICATION
Section 3.1. Indemnities by the Seller..............................10
Section 3.2. Indemnities by the Servicer............................12
Section 3.3. Contribution...........................................12
ARTICLE IV
ADMINISTRATION AND COLLECTIONS
Section 4.1. Appointment of Servicer................................13
Section 4.2. Duties of Servicer.....................................14
Section 4.3. LockBox Arrangements...................................15
Section 4.4. Enforcement Rights.....................................16
Section 4.5. Responsibilities of the Seller and Servicer............16
Section 4.6. Servicing Fee..........................................17
ARTICLE V
MISCELLANEOUS
Section 5.1. Amendments, Etc........................................17
Section 5.2. Notices, Etc...........................................17
Section 5.3. Assignability..........................................18
Section 5.4. Costs, Expenses and Taxes..............................18
Section 5.5. No Proceedings; Limitation on Payments.................19
Section 5.6. Confidentiality........................................19
Section 5.7. GOVERNING LAW AND JURISDICTION........................19
Section 5.8. Execution in Counterparts..............................20
Section 5.9. Survival of Termination................................20
Section 5.10. WAIVER OF JURY TRIAL...................................20
Section 5.11. Entire Agreement.......................................21
Section 5.12. Headings...............................................21
Section 5.13. Issuer's Liabilities...................................21
Section 5.14. Purchase and Sale Agreement........................... 21
EXHIBIT I DEFINITIONS...........................................I-1
EXHIBIT II CONDITIONS OF PURCHASES..............................II-1
EXHIBIT III REPRESENTATIONS AND WARRANTIES......................III-1
EXHIBIT IV COVENANTS............................................IV-1
EXHIBIT V TERMINATION EVENTS....................................V-1
SCHEDULE I CREDIT AND COLLECTION POLICY
SCHEDULE II LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
SCHEDULE III TRADE NAMES
ANNEX A FORM OF LOCK-BOX AGREEMENT
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SECOND AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
This SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
(this "Agreement") is entered into as of February 22, 1999 among SOLECTRON
FUNDING CORPORATION, a Delaware corporation, as seller (the "Seller"), SOLECTRON
CORPORATION, a Delaware corporation, in its individual capacity ("Solectron")
and as initial Servicer (in such capacity, together with its successors and
permitted assigns in such capacity, the "Servicer"), SOLECTRON TECHNOLOGY, INC.,
a California corporation, ("Solectron Technology") as Sub-Servicer (in such
capacity, a "Sub-Servicer"), SOLECTRON CALIFORNIA CORPORATION, a California
corporation, ("Solectron California"), as Sub-Servicer (in such capacity, a
"Sub-Servicer") QUINCY CAPITAL CORPORATION, a Delaware corporation (together
with its successors and permitted assigns, the "Issuer"), and BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking association, as
administrator (in such capacity, together with its successors and assigns in
such capacity, the "Administrator") for the Issuer pursuant to an agreement
between the Issuer and the Administrator.
PRELIMINARY STATEMENTS.
A. Certain terms that are capitalized and used throughout this Agreement are
defined in Exhibit I to this Agreement. References in the Exhibits hereto to
"the Agreement" or "this Agreement" refer to this Agreement, as amended, amended
and restated, modified or supplemented from time to time.
B. The Seller, the Servicer, the Issuer and the Administrator entered into a
Receivables Purchase Agreement, dated as of September 17, 1997.
C. The Seller, the Servicer, the Issuer and the Administrator entered into an
Amended and Restated Receivables Purchase Agreement dated as of October 31,
1998.
D. The parties to this Agreement desire to amend and restate the Amended and
Restated Receivables Purchase Agreement in order to, among other things, provide
for the addition of Solectron Technology as an Originator hereunder and to make
certain other modifications to the Amended and Restated Receivables Purchase
Agreement.
E. The Seller has sold, transferred and assigned and desires to continue to
sell, transfer and assign an undivided variable percentage interest in a pool of
receivables, and the Issuer has acquired and desires to continue to acquire such
undivided variable percentage interest, as such percentage interest shall be
adjusted from time to time based upon, in part, reinvestment payments which are
made by the Issuer and additional incremental payments made to the Seller.
In consideration of the mutual agreements, provisions and covenants
contained herein, the parties hereto agree as follows:
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. Purchase Facility. (a) Subject to and upon the terms and
conditions set forth in the Amended and Restated Receivables Purchase Agreement,
the Issuer has purchased and made reinvestments in the Purchased Interest from
the Seller (the Issuer's Purchased Interest on the last day of the Settlement
Period immediately preceding the Effective Date is herein referred to as the
"Initial Purchased Interest") and the payment for the Purchased Interests
referred to above was paid to Seller in accordance with the Amended and Restated
Receivables Purchase Agreement. The parties hereto agree that, from and after
the Effective Date, the terms and conditions of this Agreement and the rights
and obligations of the parties set forth herein shall apply to the Initial
Purchased Interest and other Purchased Interests purchased by the Issuer from
the Seller irrespective of whether the Initial Purchased Interest and other
Purchased Interests purchased by the Issuer from the seller irrespective of
whether the Initial Purchased Interest and such other Purchased Interests
originally were purchased by the Issuer pursuant to the Amended and Restated
Receivables Purchase Agreement or this Agreement.
(b) On the terms and conditions hereinafter set forth, the Issuer may, in
its sole discretion, purchase and make reinvestments in the Purchased Interest
from the Seller from time to time during the period from the Effective Date to
the Facility Termination Date; provided, that nothing herein shall be deemed or
construed as a commitment by the Issuer to fund the purchase or reinvestment
with regard to the Purchased Interest through the issuance of Notes, and it is
hereby expressly acknowledged and agreed that such funding is, and shall
continue to be, wholly discretionary on the part of the Issuer. Under no
circumstances shall the Issuer make any such purchase or reinvestment if after
giving effect to such purchase or reinvestment the aggregate outstanding Capital
of the Purchased Interest, together with the aggregate outstanding Capital under
the Parallel Purchase Agreement, would exceed the Purchase Limit.
(c) The Seller may, upon at least 5 days' notice to the Administrator,
terminate the purchase facility provided in this Section 1 in whole or, from
time to time, irrevocably reduce in part the unused portion of the Purchase
Limit; provided that each partial reduction shall be in the amount of at least
$5,000,000 or an integral multiple of $1,000,000 in excess thereof. Termination
of the purchase facility in whole shall cause the Termination Date to occur.
Section 1.2. Making Purchases. (a) Each purchase (but not reinvestments)
of undivided ownership interests with regard to the Purchased Interest hereunder
shall be made upon the Seller's irrevocable written notice delivered to the
Administrator in accordance with Section 5.2 (which notice must be received by
the Administrator prior to 11:00 a.m., San Francisco time) (i) three Business
Days prior to the requested purchase date, in the case of a purchase to be
funded at the
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Alternate Rate and based on the Eurodollar Rate, (ii) one Business Day prior to
the requested purchase date, in the case of a purchase to be funded at the
Alternate Rate and based on the Base Rate and (iii) one Business Day prior to
the requested purchase date, in the case of a purchase to be funded at the CP
Rate, which notice shall specify (A) the amount requested to be paid to the
Seller (such amount, which shall not be less than $5,000,000, being the
"Capital" relating to the undivided ownership interest then being purchased),
(B) the date of such purchase (which shall be a Business Day) and (C) the
desired funding basis for such purchase (which shall be either the Alternate
Rate or the CP Rate) and (unless such purchase shall be funded at the CP Rate)
the duration of the initial Fixed Period(s) for such purchase. The Administrator
shall promptly thereafter notify the Seller whether such terms are acceptable to
the Issuer and whether the Issuer is willing to make such a purchase. If the
Administrator notifies the Seller that such terms relating to the CP Rate are
unacceptable to the Issuer due to market conditions, then the Seller shall be
deemed to have requested that the purchase be funded at the Alternate Rate and
based on the Base Rate.
(b) On the date of each purchase (but not reinvestment) of undivided
ownership interests with regard to the Purchased Interest hereunder, the Issuer
shall, if the Administrator has notified the Seller that the Issuer is willing
to make such purchase, upon satisfaction of the applicable conditions set forth
in Exhibit II hereto, make available to the Seller in same day funds, at Bank of
America National Trust and Savings Association, account # 1233056289, an amount
equal to the Capital relating to the undivided ownership interest then being
purchased.
(c) Effective on the date of each purchase pursuant to this Section 1.2
and each reinvestment pursuant to Section 1.4, the Seller hereby sells and
assigns to the Administrator for the benefit of the Issuer an undivided
percentage ownership interest in all its right, title and interest in (i) each
Pool Receivable then existing, (ii) all Related Security with respect to such
Pool Receivables, and (iii) Collections with respect to, and other proceeds of,
such Pool Receivables and Related Security; provided that the foregoing shall
not include any Excluded Property. The Administrator and the Issuer acknowledge
that the Seller may also grant an undivided ownership interest in the same items
as described in the first sentence of this Section 1.2(c) to the Parallel
Purchase Administrator, for its benefit and the benefit of the Parallel
Purchasers under the Parallel Purchase Agreement and that the respective rights
of the Administrator, the Issuer, the Parallel Purchase Administrator and the
Parallel Purchasers with respect thereto shall be governed by the Intercreditor
Agreement.
(d) To secure all of the Seller's obligations (monetary or otherwise)
under this Agreement and the other Transaction Documents to which it is a party,
whether now or hereafter existing or arising, due or to become due, direct or
indirect, absolute or contingent, the Seller hereby grants to the Administrator,
for its benefit and the benefit of the Issuer, a security interest in all of the
Seller's right, title and interest (including without limitation any undivided
interest of the Seller) in, to and under all of the following, whether now or
hereafter owned, existing or arising (A) all Pool Receivables, (B) all Related
Security with respect to each such Pool Receivable, (C) all Collections with
respect to each such Receivable, (D) the Lock-Box Accounts and any related
deposit accounts and post office boxes and all amounts on deposit therein and
all certificates and instruments, if any, from time to time evidencing such
Lock-Box Accounts, related deposit accounts and post office
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boxes and amounts held or on deposit therein, and (E) all proceeds of, and all
amounts received or receivable under any or all of, the foregoing; provided that
the foregoing shall not include any Excluded Property. The Administrator and the
Issuer shall have, with respect to the property described in this Section
1.2(d), and in addition to all the other rights and remedies available to the
Administrator and the Issuer, all the rights and remedies of a secured party
under any applicable UCC.
Section 1.3. Purchased Interest Computation. The Purchased Interest shall
be initially computed on the date of the initial purchase hereunder. Thereafter
until the Termination Date, the Purchased Interest shall be automatically
recomputed (or deemed to be recomputed) on each Business Day other than a
Termination Day. The Purchased Interest, as computed (or deemed recomputed) as
of the day immediately preceding the Termination Date, shall thereafter remain
constant. Notwithstanding the preceding sentence, the Purchased Interest shall
become zero when the Capital thereof and Discount thereon shall have been paid
in full, all the amounts owed by the Seller hereunder to the Issuer, the
Administrator, and any other Indemnified Party or Affected Person, are paid in
full and the Servicer shall have received the accrued Servicing Fee thereon.
Section 1.4. Settlement Procedures. (a) Collection of the Pool Receivables
shall be administered by the Servicer in accordance with the terms of this
Agreement. The Seller shall provide to the Servicer on a timely basis all
information needed for such administration, including notice of the occurrence
of any Termination Day and current computations of the Purchased Interest.
(b) The Servicer shall, on each day on which Collections of Pool
Receivables are received (or deemed received) by the Seller or Servicer or an
Originator (including pursuant to Section 1.8 of the Purchase and Sale
Agreement):
(i) set aside and hold in trust (and, at the request of the
Administrator, segregate) for the Issuer, out of the percentage of such
Collections represented by the Purchased Interest, first an amount equal
to the Discount accrued through such day for each Portion of Capital and
not previously set aside and second, to the extent funds are available
therefor, an amount equal to the Servicing Fee accrued through such day
for the Purchased Interest and not previously set aside; and
(ii) subject to Section 1.4(f), if such day is not a Termination
Day, remit to the Seller, on behalf of the Issuer, the remainder of the
percentage of such Collections, represented by the Purchased Interest, to
the extent representing a return of Capital; such Collections shall be
automatically deemed reinvested in Pool Receivables, and in the Related
Security and Collections and other proceeds with respect thereto, and the
Purchased Interest shall be automatically recomputed pursuant to Section
1.3;
(iii) if such day is a Termination Day, set aside, segregate and
hold in trust for the Issuer the entire remainder of the percentage of the
Collections represented by the Purchased Interest; provided that if
amounts are set aside and held in trust on any Termination Day and
thereafter, the conditions set forth in Section 2 of Exhibit II are
satisfied or are waived by
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the Administrator, such previously set aside amounts shall, to the extent
representing a return of Capital, be reinvested in accordance with the
preceding paragraph (ii) on the day of such subsequent satisfaction or
waiver of conditions; and
(iv) during such times as amounts are required to be reinvested in
accordance with the foregoing paragraph (ii) or the proviso to paragraph
(iii), release to the Seller (subject to Section 1.4(f)) for its own
account any Collections in excess of (x) such amounts, (y) the amounts
that are required to be set aside pursuant to paragraph (i) above and (z)
any other obligations of the Seller hereunder which are then due and
owing.
(c) The Servicer shall deposit into the Administration Account, on the
last day of each Settlement Period relating to a Portion of Capital (or at such
other times as the Administrator shall require upon the occurrence and during
the continuation of (i) any Unmatured Termination Event or Termination Event or
(ii) at any time when the Rated Long Term Debt of Solectron is not rated at
least Investment Grade or (iii) any event that materially and adversely affects
the Servicer's ability to perform its obligations hereunder or the
collectibility of the Receivables), Collections held for the Issuer pursuant to
Section 1.4(b)(i) or Section 1.4(f) with respect to such Portion of Capital and
the lesser of (x) the amount of Collections then held for the Issuer pursuant to
Section 1.4(b)(iii) and (y) such Portion of Capital.
(d) Upon receipt of funds deposited into the Administration Account
pursuant to Section 1.4(c) with respect to any Portion of Capital, the
Administrator shall cause such funds to be distributed as follows:
(i) if such distribution occurs on a day that is not a Termination
Day, first to the Issuer (x) in payment in full of all accrued Discount
with respect to such Portion of Capital and (y) as a reduction of such
Portion of Capital pursuant to Section 1.4(f), if applicable, and second,
from amounts set aside in respect of the Servicing Fee pursuant to Section
1.4(b)(i), to the Servicer (payable in arrears on the last day of each
calendar month) in payment in full of accrued Servicing Fees so set aside
with respect to such Portion of Capital; and
(ii) if such distribution occurs on a Termination Day, first to the
Issuer in payment in full of all accrued Discount with respect to such
Portion of Capital, second to the Issuer in payment in full of such
Portion of Capital, third, if the Servicer is not Solectron or an
Affiliate thereof, to the Servicer in payment in full of all accrued
Servicing Fees with respect to such Portion of Capital, fourth, if the
Capital and accrued Discount with respect to each Portion of Capital has
been reduced to zero, and all accrued Servicing Fees payable to the
Servicer (if other than Solectron or an Affiliate thereof) have been paid
in full, to the Issuer, the Administrator and any other Indemnified Party
or Affected Person in payment in full of any other amounts owed thereto by
the Seller hereunder and then to the Servicer (if Solectron or an
Affiliate thereof) in payment in full of all accrued Servicing Fees.
After the Capital and Discount and Servicing Fees with respect to the Purchased
Interest, and any other amounts payable by the Seller to the Issuer, the
Administrator or any other Indemnified Party
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or Affected Person hereunder, have been paid in full, all additional Collections
with respect to the Purchased Interest shall be paid to the Seller for its own
account.
(e) For the purposes of this Section 1.4:
(i) if on any day the Outstanding Balance of any Pool Receivable is
reduced or adjusted as a result of any defective, rejected, returned,
repossessed goods or services, or any discount or other adjustment made by
the Seller, or any setoff or dispute between the Seller and an Obligor,
the Seller shall be deemed to have received on such day a Collection of
such Pool Receivable in the amount of such reduction or adjustment;
(ii) if on any day any of the representations or warranties in
paragraphs (h) or (o) of Exhibit III is not true with respect to any Pool
Receivable, the Seller shall be deemed to have received on such day a
Collection of such Pool Receivable in full;
(iii) except as provided in paragraph (i) or (ii) of this Section
1.4(e), or as otherwise required by applicable law or the relevant
Contract, all Collections received from an Obligor of any Receivable shall
be applied to the Receivables of such Obligor in the order of the age of
such Receivables, starting with the oldest such Receivable, unless such
Obligor designates in writing its payment for application to specific
Receivables; and
(iv) if and to the extent the Administrator or the Issuer shall be
required for any reason to pay over to an Obligor (or any trustee,
receiver, custodian or similar official in any Insolvency Proceeding) any
amount received by it hereunder, such amount shall be deemed not to have
been so received but rather to have been retained by the Seller and,
accordingly, the Administrator or the Issuer, as the case may be, shall
have a claim against the Seller for such amount, payable immediately.
(f) If at any time the Seller shall wish to cause the reduction of a
Portion of Capital (but not to commence the liquidation, or reduction to zero,
of the entire Capital of the Purchased Interest), the Seller may do so as
follows:
(i) the Seller shall give the Administrator at least five Business
Days' prior written notice thereof (including the amount of such proposed
reduction and the proposed date on which such reduction will commence),
(ii) on the proposed date of commencement of such reduction and on
each day thereafter, the Servicer shall cause Collections with respect to
such Portion of Capital not to be reinvested pursuant to Section
1.4(b)(ii) until the amount thereof not so reinvested shall equal the
desired amount of reduction, and
(iii) the Servicer shall hold such Collections in trust for the
Issuer, for payment to the Administrator on the last day of the current
Settlement Period relating to such Portion
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of Capital, and the applicable Portion of Capital shall be deemed reduced
in the amount to be paid to the Administrator only when in fact finally so
paid;
provided that,
A. the amount of any such reduction shall be not less than
$1,000,000 and shall be an integral multiple of $100,000, and the entire
Capital of the Purchased Interest after giving effect to such reduction
shall be not less than $10,000,000 and shall be in an integral multiple of
$1,000,000,
B. the Seller shall choose a reduction amount, and the date of
commencement thereof, so that to the extent practicable such reduction
shall commence and conclude in the same Fixed Period, and
C. if two or more Portions of Capital shall be outstanding at the
time of any proposed reduction, such proposed reduction shall be applied,
unless the Seller shall otherwise specify in the notice given pursuant to
Section 1.4(f)(i), to the Portion of Capital with the shortest remaining
Fixed Period.
Section 1.5. Fees. The Seller shall pay to the Administrator certain fees
in the amounts and on the dates set forth in a letter dated February 12, 1999
between the Seller and the Administrator delivered pursuant to Section 1 of
Exhibit II, as such letter agreement may be amended, amended and restated or
otherwise modified from time to time.
Section 1.6. Payments and Computations, Etc. (a) All amounts to be paid or
deposited by the Seller or the Servicer hereunder shall be paid or deposited no
later than 11:00 a.m. (San Francisco time) on the day when due in same day funds
in United States dollars to the Administration Account. All amounts received
after 11:00 a.m. (San Francisco time) will be deemed to have been received on
the immediately succeeding Business Day.
(b) The Seller shall, to the extent permitted by law, pay interest on any
amount not paid or deposited by the Seller (whether paid by Servicer or
otherwise) when due hereunder, at an interest rate equal to 2.0% per annum above
the Base Rate, payable on demand.
(c) All computations of interest under subsection (b) above and all
computations of Discount, fees, and other amounts hereunder shall be made on the
following basis: (i) when such computation is based on the Base Rate, and the
Base Rate is determined by Bank of America's "reference rate", such computations
shall be made on the basis of 365 or 366 days, as the case may be, and actual
days elapsed; and (ii) all other such computations shall be made on the basis of
a 360-day year and actual number of days elapsed. Whenever any payment or
deposit to be made hereunder shall be due on a day other than a Business Day,
such payment or deposit shall be made on the next succeeding Business Day and
such extension of time shall be included in the computation of such payment or
deposit.
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Section 1.7. [intentionally omitted]
Section 1.8. Increased Costs. (a) If the Administrator, the Issuer, any
Purchaser, any other Program Support Provider or any of their respective
Affiliates (each an "Affected Person") determines that the existence of or
compliance with (i) any law or regulation or any change therein or in the
interpretation or application thereof, in each case adopted, issued or occurring
after the date hereof or (ii) any request, guideline or directive from any
central bank or other Governmental Authority (whether or not having the force of
law) issued or occurring after the date of this Agreement affects or would
affect the amount of capital required or expected to be maintained by such
Affected Person and such Affected Person determines that the amount of such
capital is increased by or based upon the existence of any commitment to make
purchases of or otherwise to maintain the investment in Pool Receivables related
to this Agreement or any related liquidity facility or credit enhancement
facility and other commitments of the same type, then, upon demand by such
Affected Person (with a copy to the Administrator), the Seller shall immediately
pay to the Administrator, for the account of such Affected Person, from time to
time as specified by such Affected Person, additional amounts sufficient to
compensate such Affected Person in the light of such circumstances, to the
extent that such Affected Person reasonably determines such increase in capital
to be allocable to the existence of any of such commitments. A certificate as to
such amounts submitted to the Seller and the Administrator by such Affected
Person shall be conclusive and binding for all purposes, absent manifest error.
(b) If, due to either (i) the introduction of or any change (other than
any change by way of imposition or increase of reserve requirements referred to
in Section 1.9) in or in the interpretation of any law or regulation or (ii)
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to any Affected Person of agreeing to purchase or
purchasing, or maintaining the ownership of the Purchased Interest in respect of
which Discount is computed by reference to the Eurodollar Rate, then, upon
demand by such Affected Person, the Seller shall immediately pay to such
Affected Person, from time to time as specified, additional amounts sufficient
to compensate such Affected Person for such increased costs. A certificate as to
such amounts submitted to the Seller by such Affected Person shall be conclusive
and binding for all purposes, absent manifest error.
Section 1.9. Additional Discount on Portions of Purchased Interest Bearing
a Eurodollar Rate. The Seller shall pay to any Affected Person, so long as such
Affected Person shall be required under regulations of the Board of Governors of
the Federal Reserve System to maintain reserves with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities, additional Discount
on the unpaid Capital of the applicable Portion of Capital during each Fixed
Period in respect of which Discount is computed by reference to the Eurodollar
Rate, for such Fixed Period, at a rate per annum equal at all times during such
Fixed Period to the remainder obtained by subtracting (i) the Eurodollar Rate
for such Fixed Period from (ii) the rate obtained by dividing such Eurodollar
Rate referred to in clause (i) above by that percentage equal to 100% minus the
Eurodollar Reserve Percentage for such Fixed Period, payable on each date on
which Discount is payable on the applicable Portion of Capital. Such additional
Discount shall be determined by the
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Affected Person and notified to the Seller through the Administrator within 60
days after any Discount payment is made with respect to which such additional
Discount is requested. A certificate as to such additional Discount submitted to
the Seller by the Affected Person shall be conclusive and binding for all
purposes, absent manifest error.
Section 1.10. Requirements of Law. In the event that any Affected Person
determines that the existence of or compliance with (a) any law or regulation or
any change therein or in the interpretation or application thereof, in each case
adopted, issued or occurring after the date hereof or (b) any request, guideline
or directive from any central bank or other Governmental Authority (whether or
not having the force of law) issued or occurring after the date of this
Agreement:
(i) does or shall subject such Affected Person to any tax of any
kind whatsoever with respect to this Agreement, any increase in the
Purchased Interest or in the amount of Capital relating thereto, or does
or shall change the basis of taxation of payments to such Affected Person
on account of Collections, Discount or any other amounts payable hereunder
(excluding taxes imposed on the overall net income of such Affected
Person, and franchise taxes imposed on such Affected Person, by the
jurisdiction under the laws of which such Affected Person is organized or
has a lending office or a political subdivision thereof);
(ii) does or shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, or deposits or other liabilities in or for the account of,
purchases, advances or loans by, or other credit extended by, or any other
acquisition of funds by, any office of such Affected Person which are not
otherwise included in the determination of the Eurodollar Rate or the Base
Rate hereunder; or
(iii) does or shall impose on such Affected Person any other
condition;
and the result of any of the foregoing is (x) to increase the cost to such
Affected Person of acting as Administrator, or of agreeing to purchase or
purchasing or maintaining the ownership of undivided ownership interests with
regard to the Purchased Interest (or interests therein) or any Portion of
Capital in respect of which Discount is computed by reference to the Eurodollar
Rate or the Base Rate or (y) to reduce any amount receivable hereunder (whether
directly or indirectly) funded or maintained by reference to the Eurodollar Rate
or the Base Rate, then, in any such case, upon demand by such Affected Person
the Seller shall promptly pay such Affected Person any additional amounts
necessary to compensate such Affected Person for such increased cost or reduced
amount receivable. All such amounts shall be payable as incurred. A certificate
from such Affected Person to the Seller certifying, in reasonably specific
detail, the basis for, calculation of, and amount of such increased costs or
reduced amount receivable shall be conclusive in the absence of manifest error;
provided, however, that no Affected Person shall be required to disclose any
confidential or tax planning information in any such certificate.
Section 1.11. Inability to Determine Eurodollar Rate. In the event that
the Administrator shall have determined prior to the first day of any Fixed
Period (which determination shall be conclusive and binding upon the parties
hereto) by reason of circumstances affecting the interbank
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Eurodollar market, either (a) dollar deposits in the relevant amounts and for
the relevant Fixed Period are not available, (b) adequate and reasonable means
do not exist for ascertaining the Eurodollar Rate for such Fixed Period or (c)
the Eurodollar Rate determined pursuant hereto does not accurately reflect the
cost to the Issuer (as conclusively determined by the Administrator) of
maintaining any Portion of Capital during such Fixed Period, the Administrator
shall promptly give telephonic notice of such determination, confirmed in
writing, to the Seller prior to the first day of such Fixed Period. Upon
delivery of such notice (a) no Portion of Capital shall be funded thereafter at
the Alternate Rate determined by reference to the Eurodollar Rate, unless and
until the Administrator shall have given notice to the Seller that the
circumstances giving rise to such determination no longer exist, and (b) with
respect to any outstanding Portions of Capital then funded at the Alternate Rate
determined by reference to the Eurodollar Rate, such Alternate Rate shall
automatically be converted to the Alternate Rate determined by reference to the
Base Rate at the respective last days of the then current Fixed Periods relating
to such Portions of Capital.
ARTICLE II
REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
Section 2.1. Representations and Warranties; Covenants. Each of the
Seller and the Servicer hereby makes the representations and warranties set
forth in Exhibit III as of the Effective Date, and each of the Seller and the
Servicer hereby agrees to perform and observe the covenants set forth in Exhibit
IV.
Section 2.2. Termination Events. If any Termination Event shall occur and
be continuing, the Administrator may, by notice to the Seller, declare the
Facility Termination Date to have occurred (in which case the Facility
Termination Date shall be deemed to have occurred); provided that, automatically
upon the occurrence of any event (without any requirement for the passage of
time or the giving of notice) described in subsection (g) of Exhibit V, the
Facility Termination Date shall occur. Upon any such declaration, occurrence or
deemed occurrence of the Facility Termination Date, the Issuer and the
Administrator shall have, in addition to the rights and remedies which they may
have under this Agreement or otherwise, all other rights and remedies provided
after default under the UCC and under other applicable law, which rights and
remedies shall be cumulative.
ARTICLE III
INDEMNIFICATION
Section 3.1. Indemnities by the Seller. Without limiting any other
rights that the Administrator or the Issuer or any of their respective
Affiliates, employees, agents, successors, transferees or assigns (each, an
"Indemnified Party") may have hereunder or under applicable law,
10
the Seller hereby agrees to indemnify each Indemnified Party from and against
any and all claims, damages, expenses, losses and liabilities (including
Attorney Costs) (all of the foregoing being collectively referred to as
"Indemnified Amounts") arising out of or resulting from this Agreement (whether
directly or indirectly) or the use of proceeds of purchases or reinvestments or
the ownership of the Purchased Interest, or any interest therein, or in respect
of any Receivable or any Contract, excluding, however, (a) Indemnified Amounts
to the extent resulting from gross negligence or willful misconduct on the part
of such Indemnified Party, or (b) any overall net income taxes or franchise
taxes imposed on such Indemnified Party by the jurisdiction under the laws of
which such Indemnified Party is organized or any political subdivision thereof.
Without limiting or being limited by the foregoing, but subject to the
exclusions set forth in the preceding sentence, the Seller shall pay on demand
to each Indemnified Party any and all amounts necessary to indemnify such
Indemnified Party from and against any and all Indemnified Amounts relating to
or resulting from any of the following:
(i) the failure of any Receivable included in the calculation of the
Net Receivables Pool Balance as an Eligible Receivable to be an Eligible
Receivable, the failure of any information contained in a Seller Report to
be true and correct, or the failure of any other information provided to
the Issuer or the Administrator with respect to Receivables or this
Agreement to be true and correct;
(ii) the failure of any representation or warranty or statement made
or deemed made by the Seller (or any of its officers) under or in
connection with this Agreement to have been true and correct in all
respects when made;
(iii) the failure by the Seller to comply with any applicable law,
rule or regulation with respect to any Pool Receivable or the related
Contract; or the failure of any Pool Receivable or the related Contract to
conform to any such applicable law, rule or regulation;
(iv) the failure to vest (A) in the Issuer a valid and enforceable
perfected undivided percentage ownership interest, to the extent of the
Purchased Interest, in the Receivables in, or purporting to be in, the
Receivables Pool and the Related Security and Collections with respect
thereto and (B) in the Administrator, on its behalf and on behalf of the
Issuer, a first priority perfected security interest in the items
described in Section 1.2(d), in each case, free and clear of any Adverse
Claim;
(v) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any
Receivables in, or purporting to be in, the Receivables Pool and the
Related Security and Collections in respect thereof, whether at the time
of any purchase or reinvestment or at any subsequent time;
(vi) any dispute, claim, offset, billing adjustment or defense of
the Obligor to the payment of any Receivable in, or purporting to be in,
the Receivables Pool (including, without limitation, a defense based on
such Receivable or the related Contract not being a
11
legal, valid and binding obligation of such Obligor enforceable against it
in accordance with its terms), or any other claim resulting from the sale
of the goods or services related to such Receivable or the furnishing or
failure to furnish such goods or services or relating to collection
activities with respect to such Receivable (if such collection activities
were performed by the Seller or any of its Affiliates acting as Servicer or
by any agent or independent contractor retained by the Seller or any of its
Affiliates);
(vii) any failure of the Seller to perform its duties or obligations
in accordance with the provisions hereof or to perform its duties or
obligations under the Contracts;
(viii) any breach of warranty, products liability or other claim,
investigation, litigation or proceeding arising out of or in connection
with merchandise, insurance or services which are the subject of any
Contract;
(ix) the commingling of any portion of Collections of Pool
Receivables at any time with other funds;
(x) any investigation, litigation or proceeding related to this
Agreement or the use of proceeds of purchases or reinvestments or the
ownership of the Purchased Interest or in respect of any Receivable,
Related Security or Contract;
(xi) any reduction in Capital as a result of the distribution of
Collections pursuant to Section 1.4(d), in the event that all or a portion
of such distributions shall thereafter be rescinded or otherwise must be
returned for any reason; or
(xii) any action or omission by the Seller which constitutes or
results in the breach of any covenant or any representation and warranty
made by Solectron in the Solectron Credit Agreement.
For purposes of this Article III, in determining whether any
representation or warranty or information was true and correct, any
qualification or limitation in such representation and warranty or information
as to materiality, material adverse effect, knowledge or limitation on
enforcement shall be disregarded.
Section 3.2. Indemnities by the Servicer. Without limiting any other rights
that the Administrator or the Issuer or other Indemnified Party may have
hereunder or under applicable law, the Servicer hereby agrees to indemnify each
Indemnified Party from and against any and all Indemnified Amounts arising out
of or resulting from the breach by the Servicer of any of the covenants or
representations and warranties made by it herein or in any other Transaction
Document or from the negligence, willful misconduct or bad faith of the Servicer
in the performance of its duties hereunder or under any other Transaction
Document.
Section 3.3. Contribution. If for any reason the indemnification
provided above in this Article III is unavailable to an Indemnified Party or is
insufficient to hold an Indemnified Party
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harmless, then the Seller or the Servicer, as the case may be, shall contribute
to the maximum amount payable or paid to such Indemnified Party in such
proportion as is appropriate to reflect not only the relative benefits received
by such Indemnified Party on the one hand and the Seller or the Servicer, as the
case may be, on the other hand, but also the relative fault of such Indemnified
Party (if any) and the Seller or the Servicer, as the case may be, and any other
relevant equitable considerations.
ARTICLE IV
ADMINISTRATION AND COLLECTIONS
Section 4.1. Appointment of Servicer. (a) The servicing, administering
and collection of the Pool Receivables shall be conducted by the Person so
designated from time to time as Servicer in accordance with this Section 4.1.
Until the Administrator gives notice to the Seller and the Servicer (in
accordance with this Section 4.1) of the designation of a new Servicer,
Solectron is hereby designated as, and hereby agrees to perform the duties and
obligations of, the Servicer pursuant to the terms hereof. Upon the occurrence
and during the continuation of (i) any Unmatured Termination Event or
Termination Event or (ii) at any time when the Rated Long Term Debt of Solectron
is not rated at least Investment Grade or (iii) any event that materially and
adversely affects the Servicer's ability to perform its obligations hereunder or
the collectibility of the Receivables, the Administrator may designate as
Servicer any Person (including itself) to succeed Solectron or any successor
Servicer, on the condition in each case that any such Person so designated shall
agree to perform the duties and obligations of the Servicer pursuant to the
terms hereof.
(b) Upon the designation of a successor Servicer as set forth in Section
4.1(a) hereof, Solectron (or any successor Servicer) agrees that it will
terminate its activities as Servicer hereunder in a manner which the
Administrator determines will facilitate the transition of the performance of
such activities to the new Servicer, and Solectron shall cooperate with and
assist such new Servicer. Such cooperation shall include (without limitation)
access to and transfer of records and use by the new Servicer of all books,
records, other relevant data, licenses, hardware or software necessary or
desirable to collect the Pool Receivables and the Related Security.
(c) Solectron acknowledges that the Administrator and the Issuer have
relied on Solectron's agreement to act as Servicer hereunder in making their
decision to execute and deliver this Agreement. Accordingly, Solectron agrees
that it will not voluntarily resign as Servicer and the Seller agrees that it
will not terminate Solectron as Servicer without the prior written consent of
the Administrator.
(d) The Servicer may delegate its duties and obligations hereunder to any
subservicer (each, a "Sub-Servicer"); provided that, in each such delegation,
(i) such Sub-Servicer shall agree in writing to perform the duties and
obligations of the Servicer pursuant to the terms hereof, (ii) the Servicer
shall remain primarily liable to the Issuer for the performance of the duties
and obligations
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so delegated, (iii) the Seller, the Administrator and the Issuer shall have the
right to look solely to the Servicer for performance and (iv) the terms of any
agreement with any Sub-Servicer shall provide that the Administrator may
terminate such agreement upon the termination of the Servicer hereunder by
giving notice of its desire to terminate such agreement to the Servicer (and the
Servicer shall provide appropriate notice to such Sub-Servicer). In accordance
with the requirements set forth in this Section 4.1(d)(i) through (iv), the
Servicer hereby delegates its duties and obligations as to the Receivables
originated by Solectron Technology, Inc. to Solectron Technology, Inc. and
Solectron Technology, Inc. hereby agrees to perform such duties and obligations
pursuant to the terms hereof. In accordance with the requirements set forth in
this Section 4.1(d)(i) through (iv), the Servicer hereby delegates its duties
and obligations as to the Receivables originated by Solectron California
Corporation to Solectron California Corporation and Solectron California
Corporation hereby agrees to perform such duties and obligations pursuant to the
terms hereof.
Section 4.2. Duties of Servicer. (a) The Servicer shall take or cause to
be taken all such action as may be necessary or advisable to collect each Pool
Receivable from time to time, all in accordance with this Agreement and all
applicable laws, rules and regulations, with reasonable care and diligence, and
in accordance with the Credit and Collection Policy. The Servicer shall set
aside (and, if applicable, segregate) and hold in trust for the accounts of the
Seller and the Issuer the amount of the Collections to which each is entitled in
accordance with Article I hereto. The Servicer may, in accordance with the
Credit and Collection Policy, extend the maturity of any Pool Receivable (but
not beyond thirty (30) days) and extend the maturity or adjust the Outstanding
Balance of any Defaulted Receivable as the Servicer may determine to be
appropriate to maximize Collections thereof; provided, however, that (i) such
extension or adjustment shall not alter the status of such Pool Receivable as a
Delinquent Receivable or a Defaulted Receivable or limit the rights of the
Issuer or the Administrator under this Agreement and (ii) if a Termination Event
has occurred and is continuing and Solectron is still serving as Servicer,
Solectron may make such extension or adjustment only upon the prior written
approval of the Administrator. The Seller shall deliver (and shall cause each
Originator to deliver) to the Servicer and the Servicer shall hold for the
benefit of the Seller and the Administrator (for the benefit of the Issuer and
individually) in accordance with their respective interests, all records and
documents (including without limitation computer tapes or disks) with respect to
each Pool Receivable. Notwithstanding anything to the contrary contained herein,
the Administrator may direct the Servicer (whether the Servicer is Solectron or
any other Person) to commence or settle any legal action to enforce collection
of any Pool Receivable or to foreclose upon or repossess any Related Security;
provided, however, that no such direction may be given unless a Termination
Event has occurred and is continuing.
(b) The Servicer shall as soon as practicable following actual receipt of
collected funds turn over to the Seller the collections of any indebtedness that
is not a Pool Receivable, less, in the event that Solectron or one of its
Affiliates is not the Servicer, all reasonable and appropriate out-of-pocket
costs and expenses of such Servicer of servicing, collecting and administering
such collections; provided, however, the Servicer shall not be under any
obligation to remit any such funds to the Seller unless and until the Servicer
has received from the Seller evidence satisfactory to the Administrator and the
Servicer that the Seller is entitled to such funds hereunder and under
applicable law. The Servicer, if other than Solectron or one of its Affiliates,
shall as soon as
14
practicable upon demand, deliver to the Seller all records in its possession
which evidence or relate to any indebtedness that is not a Pool Receivable, and
copies of records in its possession which evidence or relate to any indebtedness
that is a Pool Receivable.
(c) Notwithstanding anything to the contrary contained in this Article IV,
the Servicer, if not Solectron or one of its Affiliates, shall have no
obligation to collect, enforce or take any other action described in this
Article IV with respect to any indebtedness that is not a Pool Receivable other
than to deliver to the Seller the collections and documents with respect to any
such indebtedness as described in Section 4.2(b). It is expressly understood and
agreed by the parties that such Servicer's duties in respect of any indebtedness
that is not a Pool Receivable are set forth in this Section 4.2 in their
entirety. Upon delivery by such Servicer of funds or records relating to any
indebtedness that is not a Pool Receivable to the Seller, such Servicer shall
have discharged in full all of its responsibilities to make any such delivery.
(d) The Servicer's obligations (other than indemnity obligations)
hereunder shall terminate on the later of (i) the Facility Termination Date and
(ii) the date on which all amounts required to be paid to the Issuer, the
Administrator and any other Indemnified Party or Affected Person hereunder shall
have been paid in full. After such termination, the Servicer shall promptly
deliver to the Seller all books, records and related materials that the Seller
previously provided to the Servicer in connection with this Agreement.
Section 4.3. Lock-Box Arrangements. On or prior to February 26, 1999, to
the extent requested by the Administrator, the Seller shall enter into Lock-Box
Agreements with all of the Lock-Box Banks to reflect the changes incorporated in
the Purchase and Sale Agreement and this Agreement and shall deliver original
counterparts thereof to the Administrator. Upon the occurrence and during the
continuance of a Termination Event, the Administrator may at any time thereafter
(i) give notice to each Lock-Box Bank that the Administrator is assuming
exclusive ownership and control of the Lock-Box Accounts, and (ii) take any or
all other actions permitted under the applicable Lock-Box Agreement or under
applicable law, including causing the proceeds that are sent to the respective
Lock-Box Accounts to be redirected pursuant to the Administrator's instructions
rather than deposited in the applicable Lock-Box Account. Each of the Seller and
the Servicer hereby agrees that if the Administrator, at any time, takes any
action set forth in the preceding sentence, the Administrator shall have
exclusive control of the proceeds (including Collections) of all Pool
Receivables and each of the Seller and the Servicer hereby further agrees to
take any other action that the Administrator may reasonably request to transfer
such control. Any proceeds of Pool Receivables received by the Seller or the
Servicer thereafter shall be sent immediately to the Administrator. The parties
hereto hereby acknowledge that if at any time the Administrator takes control of
any Lock-Box Account, the Administrator shall not have any rights to the funds
therein in excess of the unpaid amounts due to the Administrator, the Issuer or
any other Person hereunder and the Administrator shall distribute or cause to be
distributed such funds in accordance with Section 4.2(b) hereof (including the
proviso thereto) and Article I hereof (in each case as if such funds were held
by the Servicer thereunder); provided, however, that the Administrator shall not
be under any obligation to remit any such funds to the Seller or any other
Person unless and until the Administrator has received from the Seller or such
Person evidence
15
satisfactory to the Administrator that the Seller or such Person is entitled to
such funds hereunder and under applicable law.
Section 4.4. Enforcement Rights. (a) At any time following the occurrence
of a Termination Event or the designation of a Servicer (other than Solectron or
any of its Affiliates) pursuant to Section 4.1 hereof:
(i) the Administrator may direct the Obligors that payment of all
amounts payable under any Pool Receivable be made directly to the
Administrator or its designee;
(ii) the Administrator may instruct the Seller to give notice of the
Issuer's interest in Pool Receivables to each Obligor, which notice shall
direct that payments be made directly to the Administrator or its
designee, and upon such instruction from the Administrator the Seller
shall give such notice at the expense of the Seller; provided, that if the
Seller fails to so notify each Obligor, the Administrator may so notify
the Obligors; and
(iii) the Administrator may request the Seller to, and upon such
request the Seller shall, (A) assemble all of the records necessary or
desirable to collect the Pool Receivables and the Related Assets, and
transfer or license the use of, to the new Servicer, all software
necessary or desirable to collect the Pool Receivables and the Related
Assets, and make the same available to the Administrator or its designee
at a place selected by the Administrator, and (B) segregate all cash,
checks and other instruments received by it from time to time constituting
Collections with respect to the Pool Receivables in a manner acceptable to
the Administrator and, promptly upon receipt, remit all such cash, checks
and instruments, duly endorsed or with duly executed instruments of
transfer, to the Administrator or its designee.
(b) Upon the occurrence and during the continuation of any Unmatured
Termination Event or Termination Event or any event that materially and
adversely affects the Servicer's ability to perform its obligations hereunder or
the collectibility of the Receivables, the Seller hereby authorizes the
Administrator, and irrevocably appoints the Administrator as its
attorney-in-fact with full power of substitution and with full authority in the
place and stead of the Seller, which appointment is coupled with an interest, to
take any and all steps in the name of the Seller and on behalf of the Seller
necessary or desirable, in the determination of the Administrator, to collect
any and all amounts or portions thereof due under any and all Pool Receivables
or Related Assets, including, without limitation, endorsing the name of the
Seller on checks and other instruments representing Collections and enforcing
such Pool Receivables and Related Assets. Notwithstanding anything to the
contrary contained in this subsection (b), none of the powers conferred upon
such attorney-in-fact pursuant to the immediately preceding sentence shall
subject such attorney-in-fact to any liability if any action taken by it shall
prove to be inadequate or invalid, nor shall they confer any obligations upon
such attorney-in-fact in any manner whatsoever.
Section 4.5. Responsibilities of the Seller and Servicer. (a) Anything
herein to the contrary notwithstanding, Solectron shall cause each Originator to
perform all of its obligations under the Contracts related to the Pool
Receivables to the same extent as if interests in such Pool Receivables
16
had not been transferred hereunder and the exercise by the Administrator or the
Issuer of its rights hereunder shall not relieve Solectron or such Originator
from such obligations, and the Seller shall pay when due any taxes, including,
without limitation, any sales taxes payable in connection with the Pool
Receivables and their creation and satisfaction. The Administrator and the
Issuer shall not have any obligation or liability with respect to any Pool
Receivable or any Related Assets, nor shall any of them be obligated to perform
any of the obligations of the Seller or Solectron or each Originator under any
of the foregoing.
(b) Solectron hereby irrevocably agrees that if at any time it shall cease
to be the Servicer hereunder, it shall act (if the then current Servicer so
requests) as the data-processing agent of the Servicer and, in such capacity,
Solectron shall conduct the data-processing functions of the administration of
the Receivables and the Collections thereon in substantially the same way that
Solectron conducted such data-processing functions while it acted as the
Servicer.
Section 4.6. Servicing Fee. For so long as the Servicer is Solectron or
an Affiliate of Solectron, the Servicer shall be paid a fee, through
distributions contemplated by Section 1.4(d), equal to 0.50% per annum of the
average outstanding Capital. If the Servicer is not Solectron or an Affiliate of
Solectron, then the Servicer shall be paid a fee, through distributions
contemplated by Section 1.4(d), in an amount negotiated in good faith by such
Servicer and by the Administrator in the Administrator's sole discretion (which
fee shall be based on a per annum percentage rate agreed upon by such Servicer
and the Administrator).
ARTICLE V
MISCELLANEOUS
Section 5.1. Amendments, Etc. No amendment or waiver of any provision of
this Agreement or consent to any departure by the Seller or Servicer therefrom
shall be effective unless in a writing signed by the Administrator, and, in the
case of any amendment, by the Seller and the Servicer and then such amendment,
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No failure on the part of the Issuer or
Administrator to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right.
Section 5.2. Notices, Etc. All notices and other communications hereunder
shall, unless otherwise stated herein, be in writing (which shall include
facsimile communication) and sent or delivered, to each party hereto, at its
address set forth under its name on the signature pages hereof or at such other
address as shall be designated by such party in a written notice to the other
parties hereto. Notices and communications by facsimile shall be effective when
sent (and shall be followed by hard copy sent by first class mail), and notices
and communications sent by other means shall be effective when received.
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Section 5.3. Assignability. (a) This Agreement and the Issuer's rights and
obligations herein (including ownership of the Purchased Interest) shall be
assignable, in whole or in part, by the Issuer and its successors and assigns
with the prior written consent of the Seller; provided, however, that such
consent shall not be unreasonably withheld; and provided, further, however, that
no such consent shall be required if the assignment is made to Bank of America,
any Affiliate of Bank of America (other than a director or officer of Bank of
America), any Purchaser or other Program Support Provider or any Person which is
(i) in the business of issuing short-term promissory notes and (ii) associated
with or administered by Bank of America or any Affiliate of Bank of America.
Each assignor may, in connection with the assignment, disclose to the applicable
assignee any information relating to Solectron, the Seller or the Pool
Receivables furnished to such assignor by or on behalf of Solectron, the Seller,
the Issuer or the Administrator.
(b) The Issuer may at any time grant to one or more banks or other
institutions (each a "Purchaser") party to the Liquidity Asset Purchase
Agreement or to any other Program Support Provider participating interests in
the Purchased Interest. In the event of any such grant by the Issuer of a
participating interest to a Purchaser or other Program Support Provider, the
Issuer shall remain responsible for the performance of its obligations
hereunder. The Seller agrees that each Purchaser or other Program Support
Provider shall be entitled to the benefits of Sections 1.8, 1.9 and 1.10 with
respect to its participating interest.
(c) This Agreement and the rights and obligations of the Administrator
hereunder shall be assignable, in whole or in part, by the Administrator and its
successors and assigns.
(d) Except as provided in Section 4.1(d), neither the Seller nor the
Servicer may assign its rights or delegate its obligations hereunder or any
interest herein without the prior written consent of the Administrator.
(e) Without limiting any other rights that may be available under
applicable law, the rights of the Issuer may be enforced through it or by its
agents.
Section 5.4. Costs, Expenses and Taxes. (a) In addition to the rights of
indemnification granted under Section 3.1 hereof, the Seller agrees to pay on
demand all costs and expenses in connection with the preparation, execution,
delivery and administration (including, without limitation, periodic auditing of
Pool Receivables) of this Agreement, the Purchase and Sale Agreement, the
Liquidity Asset Purchase Agreement, any asset purchase agreement, reimbursement
agreement, letter of credit or similar agreement relating to the sale or
transfer of interests in Purchased Interests and the other documents and
agreements to be delivered hereunder, and of any amendment, modification or
waiver of any of the foregoing, including, without limitation, Attorney Costs
for the Administrator, the Issuer and their respective Affiliates and agents
with respect thereto and with respect to advising the Administrator, the Issuer
and their respective Affiliates and agents as to their rights and remedies under
this Agreement and the other Transaction Documents, and all costs and expenses,
if any (including, without limitation, Attorney Costs), of the Administrator,
the Issuer and their respective Affiliates and agents, in connection with the
enforcement of this Agreement and the other Transaction Documents.
18
(b) In addition, the Seller shall pay on demand any and all stamp and
other taxes and fees payable in connection with the execution, delivery, filing
and recording of this Agreement or the other documents or agreements to be
delivered hereunder, and agrees to save each Indemnified Party harmless from and
against any liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees.
Section 5.5. No Proceedings; Limitation on Payments. Each of the Seller,
the Servicer, the Administrator, each assignee of the Purchased Interest or any
interest therein and each Person which enters into a commitment to purchase the
Purchased Interest or interests therein hereby covenants and agrees that it will
not institute against, or join any other Person in instituting against, the
Issuer any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding, or other proceeding under any federal or state bankruptcy or similar
law, for one year and one day after the latest maturing Note issued by the
Issuer is paid in full.
Section 5.6. Confidentiality. Unless otherwise required by applicable law,
the Seller and the Servicer each agree to maintain the confidentiality of this
Agreement and the other Transaction Documents (and all drafts thereof) in
communications with third parties and otherwise; provided that this Agreement
may be disclosed to (a) third parties to the extent such disclosure is made
pursuant to a written agreement of confidentiality in form and substance
reasonably satisfactory to the Administrator, and (b) the Seller's legal counsel
and auditors if they agree to hold it confidential.
Section 5.7. GOVERNING LAW AND JURISDICTION. (a)THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS
(WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF), EXCEPT TO
THE EXTENT THAT THE PERFECTION (OR THE EFFECT OF PERFECTION OR NON-PERFECTION)
OF THE INTERESTS OF THE ISSUER IN THE POOL RECEIVABLES, AND THE OTHER ITEMS
DESCRIBED IN SECTION 1.2(d), IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF ILLINOIS.
(b) EACH SOLECTRON PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT OF THE
NORTHERN DISTRICT OF ILLINOIS, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT
ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH ILLINOIS STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN
SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN
ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT IN
19
ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT SHALL AFFECT ANY
RIGHT THAT THE ADMINISTRATOR OR THE ISSUER MAY OTHERWISE HAVE TO BRING ANY
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION
DOCUMENT AGAINST ANY SOLECTRON PARTY OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION. EACH SOLECTRON PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT IN ANY COURT REFERRED TO IN THIS CLAUSE (b). EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT. EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS
TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 5.2. NOTHING
IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
Section 5.8. Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and all of which when taken together shall constitute one and the
same agreement.
Section 5.9. Survival of Termination. The provisions of Sections 1.8, 1.9,
1.10, 3.1, 3.2, 5.4, 5.5, 5.6, 5.7 , 5.10 and 5.13 (and this Section 5.9) shall
survive any termination of this Agreement except that the provisions of Sections
1.8, 1.9 and 1.10 shall survive only for a period of six months following such
termination; provided that the lapse of such six month period shall not limit or
prevent the effectiveness of any request or demand for payment under Section
1.8, 1.9 or 1.10 which has made prior to the end of such six month period.
Section 5.10. WAIVER OF JURY TRIAL. THE ISSUER, THE SELLER, THE SERVICER
AND THE ADMINISTRATOR EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR INDEMNIFIED PARTY,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE ISSUER,
THE SELLER, THE SERVICER AND THE ADMINISTRATOR EACH AGREE THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING
20
THE FOREGOING, EACH OF THE PARTIES HERETO FURTHER AGREES THAT ITS RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT OR ANY PROVISION HEREOF OF THEREOF. THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, AMENDMENTS AND RESTATEMENTS, OR MODIFICATIONS TO
THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT (INCLUDING WITHOUT LIMITATION
ANY EXTENSION OF THE FACILITY TERMINATION DATE).
Section 5.11. Entire Agreement. This Agreement embodies the entire
agreement and understanding between the Issuer, the Seller, the Servicer and the
Administrator, and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof, except for that certain letter referred to in Section 1.5. The
Exhibits, Schedules and Annex to this Agreement shall be deemed incorporated
into this Agreement as if set forth herein.
Section 5.12. Headings. The captions and headings of this Agreement and in
any Exhibit, Schedule or Annex hereto are for convenience of reference only and
shall not affect the interpretation hereof or thereof.
Section 5.13. Issuer's Liabilities. The obligations of the Issuer under
this Agreement are solely the corporate obligations of the Issuer. No recourse
shall be had for any obligation or claim arising out of or based upon this
Agreement against MLMMI or against any stockholder, employee, officer, director
or incorporator of the Issuer. For purposes of this paragraph, "MLMMI" shall
mean and include Xxxxxxx Xxxxx Money Markets, Inc. and all affiliates thereof
and any employee, officer, director, incorporator, shareholder or beneficial
owner of any of them; provided, however, that the Issuer shall not be considered
to be an affiliate of MLMMI; and provided, further, that this Section 5.13 shall
not relieve any such Person of any liability it might otherwise have for its own
gross negligence or willful misconduct. The agreements provided in this Section
5.13 shall survive termination of this Agreement.
Section 5.14. Purchase and Sale Agreement. In consideration of the
obligations of the Issuer now or hereafter arising under this Agreement, the
Seller hereby sells and assigns to the Administrator, for its benefit and the
benefit of the Issuer, without any formal or other instrument of assignment all
of the Seller's right, title and interest in, to and under the Purchase and Sale
Agreement and the other Transaction Documents, and all rights, remedies, powers,
privileges and claims of the Seller under the Purchase and Sale Agreement and
the other Transaction Documents (whether arising pursuant to the terms of the
Purchase and Sale Agreement (including Article VI of the Purchase and Sale
Agreement) and the other Transaction Documents or otherwise available to the
Seller at law or in equity) whether against any Originator, the Guarantor or
otherwise, including without limitation, (i) the right of the Seller, at any
time, to enforce the Purchase and Sale Agreement and any other Transaction
Documents against each Originator and the Servicer, (ii) the
21
right to appoint a successor to the Servicer, (iii) the right, at any time, to
give or withhold any and all consents, requests, notices, directions, approvals,
demands, extensions or waivers under or with respect to the Purchase and Sale
Agreement, any other Transaction Document or the obligations in respect of each
Originator or Guarantor thereunder to the same extent as the Seller may do, and
(iv) all of the Seller's rights, remedies, powers, privileges, and claims under
or with respect to the Purchase and Sale Agreement and the other Transaction
Documents (whether arising pursuant to the terms of the Purchase and Sale
Agreement or any other Transaction Document or otherwise available at law or in
equity). Notwithstanding the foregoing, the Seller shall nevertheless be
permitted to give all consents, requests, notices, directions, approvals,
demands, extensions or waivers, if any, which are required by the specific terms
of the Purchase and Sale Agreement and the other Transaction Documents to be
given by the Seller, unless the Administrator shall otherwise direct the Seller.
The assignment pursuant to the first sentence of this Section 5.14 shall not
relieve the Seller, any Originator, the Guarantor or Solectron from (or require
the Issuer or the Administrator to undertake) the performance of any term,
covenant or agreement on the part of the Seller, any Originator, the Guarantor
or Solectron to be performed or observed under or in connection with the
Purchase and Sale Agreement and the other Transaction Documents, any Pool
Receivable or any Related Security. The Administrator and the Issuer acknowledge
that the Seller may also grant an assignment as described in the first sentence
of this Section 5.14, to the Parallel Purchase Administrator, for its benefit
and the benefit of the Parallel Purchasers, under the Parallel Purchase
Agreement and that the respective rights of the Administrator, the Issuer, the
Parallel Purchase Administrator and the Parallel Purchasers with respect thereto
shall be governed by the Intercreditor Agreement.
22
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
SOLECTRON FUNDING CORPORATION
By: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title: President
000 Xxxxxxxxx Xxxxx
Xxxxxxxx 0
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Treasurer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
SOLECTRON CORPORATION, in its individual
capacity and as initial Servicer
By: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title: Sr. Vice President, CFO and Secy.
000 Xxxxxxxxx Xxxxx
Xxxxxxxx 0
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Treasurer
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
S-1
SOLECTRON TECHNOLOGY, INC., as Sub-Servicer
By: /s/ Xxxxxx Xxxxxxxxxx
Name: Xxxxxx Xxxxxxxxxx
Title: Assistant Secretary
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: _____________________
Telephone No.: _________________
Facsimile No.: __________________
SOLECTRON CALIFORNIA CORPORATION,
as Sub-Servicer
By: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title: Chief Financial Officer and Secy.
000 Xxxxxxxxx Xxxxx
Xxxxxxxx 0
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Treasurer
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
S-2
QUINCY CAPITAL CORPORATION
By:/s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
c/o AMACAR Group LLC
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxxxx Xxxxxxxx
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
with a copy to:
Bank of America National Trust
and Savings Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxx
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
S-3
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrator
By: /s/ Xxxx X.X. Xxxxxx
Name: Xxxx X.X. Xxxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxx
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
S-4
EXHIBIT I
DEFINITIONS
As used in the foregoing Second Amended and Restated Receivables Purchase
Agreement (including (i) in its Exhibits and (ii) in any other Transaction
Document that refers to the definitions set forth in this Exhibit)), the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined). Unless
otherwise indicated, all Section, Annex, Exhibit and Schedule references in this
Exhibit are to Sections of and Annexes, Exhibits and Schedules to the Agreement.
"Administration Account" means the special account (account number
47-03421) of the Issuer maintained at the office of Bank of America at 000 Xxxxx
XxXxxxx Xxxxxx, or such other account as may be so designated in writing from
time to time by the Administrator to the Seller and the Servicer.
"Administrator" has the meaning set forth in the preamble to the
Agreement.
"Adverse Claim" means a Lien, security interest or other
encumbrance, it being understood that a Lien, security interest or other
encumbrance, in favor of the Issuer or Parallel Purchaser or the Administrator
or the Parallel Purchase Administrator shall not constitute an Adverse Claim.
"Affected Person" has the meaning set forth in Section 1.8.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by or is under common control
with such Person or is a director or officer of such Person, except that with
respect to the Issuer, Affiliate shall mean the holder(s) of its capital stock.
"Agreement" means the Second Amended and Restated Receivables
Purchase Agreement dated as of February 22, 1999 among Solectron Funding
Corporation, as Seller, Solectron Corporation, individually and as Servicer,
Quincy Capital Corporation, as Issuer and Bank of America National Trust and
Savings Association, as Administrator, as the same may be amended, supplemented
or otherwise modified from time to time.
"Alternate Rate" for any Fixed Period for any Portion of Capital of
the Purchased Interest means an interest rate per annum equal to (a) 0.55% per
annum above the Eurodollar Rate for such Fixed Period (or, if such Portion of
Capital has been funded for three consecutive one-month Fixed Periods at an
Alternate Rate based upon the Eurodollar Rate, 0.625% per annum above the
Eurodollar Rate for such Fixed Period) or (b) the Base Rate for such Fixed
Period; provided, however, that in the case of
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(i) any Fixed Period on or prior to the first day of which the
Administrator shall have been notified by the Issuer or a Purchaser or
other Program Support Provider that the introduction of or any change in
or in the interpretation of any law or regulation makes it unlawful, or
any central bank or other Governmental Authority asserts that it is
unlawful, for the Issuer or such Purchaser or other Program Support
Provider to fund any Portion of Capital (based on the Eurodollar Rate) set
forth above (and the Issuer or such Purchaser or other Program Support
Provider shall not have subsequently notified the Administrator that such
circumstances no longer exist),
(ii) any Fixed Period of one to (and including) 13 days,
(iii) any Fixed Period as to which the Administrator does not
receive notice, by no later than 11:00 a.m.(San Francisco time) on (w) the
Business Day preceding the first day of such Fixed Period that the Seller
desires that the related Portion of Capital be funded at the CP Rate, (x)
the third Business Day preceding the first day of such Fixed Period that
the Seller desires that the related Portion of Capital be funded at the
Alternate Rate and based on the Eurodollar Rate, or (y) the Seller has
given the notice contemplated by clause (w) of this clause (iii) and the
Administrator shall have notified the Seller that funding the related
Portion of Capital at the CP Rate is unacceptable to the Issuer due to
market conditions, or
(iv) any Fixed Period relating to a Portion of Capital which is less
than $1,000,000,
the "Alternate Rate" for each such Fixed Period shall be an interest rate per
annum equal to the Base Rate in effect on each day of such Fixed Period. The
"Alternate Rate" for any Termination Day shall be an interest rate equal to 2%
per annum above the Base Rate in effect on such day.
"Amended and Restated Receivables Purchase Agreement" means the
Amended and Restated Receivables Purchase Agreement dated as of October 31, 1998
among Solectron Funding Corporation, as Seller, Solectron Corporation,
individually and as Servicer, Receivables Capital Corporation, as Issuer and
Bank of America National Trust and Savings Association, as Administrator, as
amended, supplemented or otherwise modified in accordance with its terms and in
effect immediately prior to the effectiveness of the Agreement.
"Applicable Concentration Percentage" for any Obligor means at any
time (i) 16.0% if such obligor is a Special Obligor; (ii) 12.0% if (A) its Rated
Long Term Debt is rated at least AA- or Aa3 or its Rated Short Term Debt is
rated at least A-1+ or P-1, in each case by Standard & Poor's or Xxxxx'x,
respectively or (B) such Obligor is a Designated Obligor; (iii) 8.0% if its
Rated Long Term Debt is rated at least BBB+ or Baa1 or its Rated Short Term Debt
is rated at least A-2 or P-2, in each case by Standard & Poor's or Xxxxx'x,
respectively; (iv) 6.0% if its Rated Long Term Debt is rated at least Investment
Grade; and (v) the Normal Concentration Percentage if such Obligor has no
outstanding Investment Grade Rated Long Term Debt; provided, that the
Administrator may at any time, by written notice to the Servicer, reduce the
Applicable Concentration Percentage for any Obligor to the Normal Concentration
Percentage if the Administrator determines in good faith that
I-2
the creditworthiness of such Obligor is not sufficient to support a
concentration percentage greater than the Normal Concentration Percentage.
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the allocated cost of
internal legal services and all disbursements of internal counsel.
"Average Maturity" means at any time that period of days equal to
the average maturity of the Pool Receivables calculated by the Servicer in the
then most recent Seller Report; provided that if the Administrator shall have a
reasonable basis to disagree with any such calculation, the Administrator may
recalculate such Average Maturity, and any such recalculation shall be prima
facie evidence of such Average Maturity.
"Bank of America" means Bank of America National Trust and Savings
Association, a national banking association.
"Bankruptcy Code" means the United States Bankruptcy Reform Act of 1978 (11
X.X.X.xx. 101, et seq.), as amended from time to time.
"Base Rate" means for any day, a fluctuating interest rate per annum
as shall be in effect from time to time, which rate shall be at all times equal
to the higher of:
(a) the rate of interest in effect for such day as publicly
announced from time to time by Bank of America in San Francisco,
California, as its "reference rate." It is a rate set by Bank of America
based upon various factors including Bank of America's costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or
below such announced rate; and
(b) 0.50% per annum above the latest Federal Funds Rate.
"Business Day" means any day on which (i) banks are not authorized
or required to close in Chicago, New York City or San Francisco and (ii) if this
definition of "Business Day" is utilized in connection with the Eurodollar Rate,
dealings are carried out in the London interbank market.
"Capital" means with respect to each of the Agreement and the
Parallel Asset Purchase Agreement, as applicable, the amount paid to the Seller
in respect of the Purchased Interest by the Issuer or the Parallel Purchasers
pursuant to the Agreement or the Parallel Asset Purchase Agreement, as
applicable, in each case reduced from time to time by Collections distributed
and applied on account of such Capital pursuant to Section 1.4(d) of the
Agreement or the Parallel Purchase Agreement, as applicable, and increased from
time to time by reinvestments pursuant to Section 1.4(b)(ii) of the Agreement or
the Parallel Asset Purchase Agreement, as applicable; provided, that if such
Capital shall have been reduced by any distribution and thereafter all or a
I-3
portion of such distribution is rescinded or must otherwise be returned for any
reason, such Capital shall be increased by the amount of such rescinded or
returned distribution, as though it had not been made. The amount of Capital
outstanding under each of the Agreement or the Parallel Asset Purchase
Agreement, as the case may be, shall be computed separately for each such
agreement by reference to the amount paid to the Seller under such agreement in
respect of the separately computed Purchased Interest acquired by the Issuer
under the Agreement or the Parallel Purchasers under the Parallel Asset Purchase
Agreement.
"Capital Lease Obligations" of any Person means the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under
generally accepted accounting principles, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with generally
accepted accounting principles.
"Change of Control" means any of the following events or
circumstances:
(a) any Person or "group" (within the meaning of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended) shall either (i)
acquire beneficial ownership of more than 35% of any outstanding class of
common stock of Solectron having ordinary voting power in the election of
directors of Solectron or (ii) obtain the power (whether or not exercised)
to elect a majority of Solectron's directors;
(b) Solectron or the Seller shall (i) merge with any other Person
and not be the surviving company or (ii) sell all or substantially all of
its assets to another Person;
(c) any Person or "group" (within the meaning of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended) other than
Solectron or any of its subsidiaries shall either (i) acquire beneficial
ownership of more than 35% of any outstanding class of common stock of
Solectron California or Solectron Technology, Inc. or (ii) obtain the
power (whether or not exercised) to elect a majority of either Solectron
California's or Solectron Technology's directors; or
(d) a majority of the Board of Directors of Solectron shall not be
Continuing Directors. As used in this definition, "Continuing Directors"
shall mean the directors of Solectron on the date of this Agreement and
each other director of Solectron, if such other director's nomination for
election to the Board of Directors of Solectron is recommended by a
majority of the then Continuing Directors.
"Collections" means, with respect to any Pool Receivable, (a) all
funds (regardless of whether in the form of cash, checks, money orders, wire
transfers, money-grams or otherwise) which are received by an Originator, the
Seller, the Servicer or the Administrator in payment of any amounts owed in
respect of such Receivable (including, without limitation, purchase price,
finance charges, interest and all other charges), or applied to amounts owed in
respect of such Receivable
I-4
(including, without limitation, insurance payments and net proceeds of the sale
or other disposition of repossessed goods or other collateral or property of the
related Obligor or any other Person directly or indirectly liable for the
payment of such Pool Receivable and available to be applied thereon), (b) all
amounts deemed to have been received pursuant to Section 1.4(e) of the Agreement
or the Parallel Purchase Agreement or Section 1.8 of the Purchase and Sale
Agreement and (c) all other proceeds of such Receivable (regardless of whether
in the form of cash, checks, money orders, wire transfers, money-grams or
otherwise).
"Contract" means, with respect to any Receivable, any and all
contracts, understandings, instruments, agreements, leases, invoices, notes, or
other writings pursuant to which such Receivable arises or which evidences such
Receivable or under which an Obligor becomes or is obligated to make payment in
respect of such Receivable.
"CP Rate" for any Fixed Period for any Portion of Capital of the
Purchased Interest means, to the extent the Issuer funds such Portion of Capital
for such Fixed Period by issuing Notes, the per annum rate equivalent to the
"weighted average cost" (as defined below) related to the issuance of Notes that
are allocated, in whole or in part, by the Issuer or the Administrator to fund
or maintain such Portion of Capital (and which may also be allocated in part to
the funding of other Portions of Capital hereunder or of other assets of the
Issuer); provided, however, that if any component of such rate is a discount
rate, in calculating the "CP Rate" for such Portion of Capital for such Fixed
Period, the Issuer shall for such component use the rate resulting from
converting such discount rate to an interest bearing equivalent rate per annum.
As used in this definition, the Issuer's "weighted average cost" shall consist
of (w) the actual interest rate (or discount) paid to purchasers of the Issuer's
Notes, together with the commissions of placement agents and dealers in respect
of such Notes, to the extent such commissions are allocated, in whole or in
part, to such Notes by the Issuer or the Administrator, (x) certain
documentation and transaction costs associated with the issuance of such Notes,
(y) any incremental carrying costs incurred with respect to Notes maturing on
dates other than those on which corresponding funds are received by the Issuer,
and (z) other borrowings by the Issuer (other than under any Program Support
Agreement), including borrowings to fund small or odd dollar amounts that are
not easily accommodated in the commercial paper market.
"Credit and Collection Policy" means those receivables credit and
collection policies and practices in effect on the date of the Agreement and
described in Schedule I hereto, as modified in compliance with the Agreement.
"Defaulted Receivable" means a Receivable:
(i) as to which any payment, or part thereof, remains unpaid for at
least 151 days from the original customer billing date for such payment;
(ii) as to which the Obligor thereof or any other Person obligated
thereon or owning any Related Security in respect thereof has taken any
action, or suffered any event to occur, of the type described in paragraph
(g) of Exhibit V hereto; or
I-5
(iii) (a) which, consistent with the Credit and Collection Policy,
would be written off as uncollectible or (b) which has been written off as
uncollectible.
"Delinquency Ratio" means the ratio (expressed as a percentage)
computed as of each Month-End Date having (a) a numerator that is equal to the
aggregate Outstanding Balance of Delinquent Receivables as of that Month-End
Date and (b) a denominator that is the aggregate Outstanding Balance of
Receivables as of that Month-End Date.
"Delinquent Receivable" means any Receivable that is not a Defaulted
Receivable as to which any payment, or part thereof, remains unpaid for at least
91 days from the original customer billing date for such Receivable.
"Designated Obligor" means, as of the date hereof, Cisco Systems,
Inc. and Sun Microsystems, Inc., and thereafter, shall include any other Obligor
designated as such in writing by the Administrator to the Servicer, until such
time as the Administrator shall have notified the Servicer in writing that such
Obligor is no longer a Designated Obligor hereunder (it being understood that
the Administrator shall not notify the Servicer that an Obligor is no longer a
Designated Obligor absent a good-faith determination on its part that such
Obligor's credit has declined).
"Dilution Horizon Variable" means, at any time, a ratio having (a) a
numerator equal to the sum of the aggregate amounts payable pursuant to invoices
giving rise to Receivables (without giving effect to any payments received with
respect to such invoices) and generated by the Originators during the calendar
month ending on the most recent Month-End Date and (b) a denominator equal to
the aggregate Outstanding Balance of all Eligible Receivables as of the most
recent Month-End Date.
"Dilution Percentage" means, for any calendar month, the result
(expressed as a percentage) calculated in accordance with the following formula:
{(2.0 x ADR) + [(HDR-ADR) x (HDR/ADR)]} x DHV
where:
ADR = the average of the Sales-Based Dilution Ratios during the
period of 12 consecutive calendar months ending on the related
Month-End Date.
DHV = the Dilution Horizon Variable.
HDR = the highest Sales-Based Dilution Ratio for any calendar
month within the 12 consecutive calendar months ending on the
related Month-End Date.
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"Discount" means:
(i) for the Portion of Capital of the Purchased Interest for any
Fixed Period to the extent the Issuer will be funding such Portion of
Capital on the first day of such Fixed Period through the issuance of
Notes,
CPR x C x ED + TF
---
360
(ii) for the Portion of Capital of the Purchased Interest for any
Fixed Period to the extent the Issuer will not be funding such Portion of
Capital on the first day of such Fixed Period through the issuance of
Notes,
ED
---
AR x C x 360 + TF
where:
AR = the Alternate Rate for the Portion of Capital of the Purchased Interest for
such Fixed Period
C = the Portion of Capital of the Purchased Interest during such Fixed Period
CPR = the CP Rate for the Portion of Capital of the Purchased Interest for such
Fixed Period
ED = the actual number of days during such Fixed Period
TF = the Termination Fee, if any, for the Portion of Capital of the Purchased
Interest for such Fixed Period
; provided that (x) no provision of the Agreement or the Parallel Purchase
Agreement shall require the payment or permit the collection of Discount in
excess of the maximum permitted by applicable law; (y) that Discount for the
Portion of Capital of the Purchased Interest shall not be considered paid by any
distribution to the extent that at any time all or a portion of such
distribution is rescinded or must otherwise be returned for any reason and (z)
on each day during any Period when the Issuer shall have indicated pursuant to
Section 1.2.(a) that it will not purchase or reinvest in the Purchased Interest
under the Agreement, Discount will accrue on each remaining Portion of Capital
under the Agreement at the highest rate then applicable to any Portion of
Capital under the Parallel Purchase Agreement.
"Discount Rate Percentage" has the meaning set forth in Section 1.5(d) of
the Purchase and Sale Agreement.
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"Discount Reserve" for the Purchased Interest under the Agreement or
the Parallel Purchase Agreement at any time means the sum of (i) the Termination
Discount at such time for such Purchased Interest, and (ii) the then accrued and
unpaid Discount for such Purchased Interest.
"Dividend" means in respect of any corporation or any Solectron
Party, as the case may be, (i) cash distributions or any other distributions on,
or in respect of, any class of capital stock of such corporation or such
Solectron Party, as the case may be, except for distributions made solely in
shares of stock of the same class, and (ii) any and all funds, cash or other
payments made in respect of the redemption, repurchase or acquisition of such
stock, unless such stock shall be redeemed or acquired through the exchange of
such stock with stock of the same class.
"Effective Date" means the date upon which (i) all Conditions of
Purchases in Section 1 of Exhibit I to the Purchase and Sale Agreement and (ii)
all Conditions of Purchase in Section 1 of Exhibit II to this Agreement are
fulfilled; provided that Administrator shall notify Solectron when the Effective
Date has occurred and such notice need not be in written form.
"Eligible Receivables" means, at any time, Receivables:
(i) the Obligor of which is a United States resident or a resident
of such other jurisdiction as has been approved in writing by the
Administrator, is not an Affiliate of any Solectron Party, is not a
government or a governmental subdivision or agency or instrumentality, is
not declared ineligible by the Administrator, is not subject to any action
of the type described in paragraph (g) of Exhibit V, and is not an
Excluded Obligor;
(ii) which are denominated and payable only in U.S. dollars in the
United States;
(iii) which have a stated maturity and which stated maturity is not
more than 91 days after the customer billing date of such Receivable;
(iv) which arise in the ordinary course of the applicable
Originator's business;
(v) which arise under a Contract which is in full force and effect
and which is a legal, valid and binding obligation of the related Obligor,
enforceable against such Obligor in accordance with its terms;
(vi) which conform with all applicable laws, rulings and regulations
in effect;
(vii) which are not the subject of any asserted dispute (whether or
not in writing), offset, hold back defense, Adverse Claim or other claim
and which do not arise from the sale of inventory which is subject to any
Adverse Claim (other than Permitted Liens of the types described in
clauses (a), (b) and (h) of the definition of Permitted Liens), it being
understood that if a dispute pertains only to a portion of the Outstanding
Balance of an otherwise Eligible Receivable, such portion shall be reduced
in accordance with Section 1.4(e)(i) of the Agreement and the remaining
portion may continue to be characterized as a Eligible
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Receivable, subject to satisfying the other requirements of this definition of
Eligible Receivables;
(viii) which comply with the requirements of the Credit and Collection
Policy;
(ix) which arise from the completion of the sale and delivery of goods or
services performed, and which do not represent an invoice in advance of such
completion;
(x) which are not subject to any contingent performance requirements of the
applicable Originator unless such requirements are guaranteed or insured by
third parties acceptable to the Administrator;
(xi) which do not require the consent of the related Obligor to be sold or
assigned;
(xii) which have not been modified or restructured since their creation,
except as permitted pursuant to Section 4.2 of the Agreement;
(xiii) (A) to which the applicable Originator has good and marketable title
immediately prior to the sale thereof to the Seller, and as to which the Seller
has good and marketable title, and (B) which, immediately prior to the
applicable Originator's sale thereof to the Seller, were freely assignable by
such Originator and which are freely assignable by the Seller;
(xiv) for which the Issuer shall have a valid, perfected and enforceable
undivided percentage ownership interest, to the extent of the Purchased
Interest, and for which the Administrator for its benefit and the benefit of the
Issuer shall have a valid and enforceable first priority perfected security
interest therein and in the Related Security and Collections with respect
thereto, in each case free and clear of any Adverse Claim;
(xv) which constitute "accounts" as defined in the UCC, and which are not
evidenced by instruments or chattel paper;
(xvi) which are not Defaulted Receivables;
(xvii) for which the applicable Originator has established no offset
arrangements with the related Obligor;
(xviii) for which Defaulted Receivables of the related Obligor do not
exceed 25% of all such Obligor's Receivables;
(xix) which do not represent any amounts owing by any Obligor in respect of
sales taxes, interest, late charges, or similar items;
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(xx) which meet the eligibility requirements appropriate to the specific
type of Receivables which the Administrator may set based on aging, turnover,
delinquency, loss, dilution, type or other factor that are necessary to maintain
an A-1+/P-1 rating by S&P and Xxxxx'x respectively, on the Notes;
(xxi) the Obligor of which has been instructed to make payment thereon to a
Lock-Box Account or a post office box to which only Lock-Box Banks have access
or otherwise solely in accordance with clause (j) of Exhibit IV of this
Agreement; and
(xxii) with respect to which the Administrator has not directed the
Servicer (whether the Servicer is Solectron or any other Person) to commence or
settle any legal action to enforce collection of such Receivable or to foreclose
upon or repossess any Related Security which in good faith the Administrator
believes that the failure to commence, settle, or effect such legal action,
foreclosure or repossession could adversely affect Receivables constituting a
material portion of the Pool Receivables;
provided that, the Outstanding Balance of any Eligible Receivable shall be
reduced by the aggregate amount of Indebtedness of the applicable Originator
owing to the related Obligor or any of its Affiliates.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute of similar import,
together with the regulations thereunder, in each case as in effect from time to
time. References to sections of ERISA also refer to any successor sections.
"Eurodollar Rate" means, for any Fixed Period, an interest rate per
annum (rounded upward to the nearest 1/16th of 1%) determined pursuant to the
following formula:
Eurodollar Rate = LIBOR
---------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means, for any Fixed Period, the
maximum reserve percentage (expressed as a decimal, rounded upward to the
nearest 1/100th of 1%) in effect on the date LIBOR for such Fixed Period
is determined under regulations issued from time to time by the Federal
Reserve Board for determining the maximum reserve requirement (including
any emergency, supplemental or other marginal reserve requirement) with
respect to Eurocurrency funding (currently referred to as "Eurocurrency
Liabilities") having a term comparable to such Fixed Period; and
"Excluded Obligor" means an Obligor, so designated from time to time
in writing as such by the Administrator to the Servicer in the event that the
Administrator reasonably considers such Obligor to be unacceptable due to the
credit risk associated with such Obligor or due to
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the nature of such Obligor's business, it being understood that from time to
time the Administrator may revoke its designation of one or more Obligors as
Excluded Obligors by written notice to the Servicer.
"Excluded Property" means any Collections released to Seller pursuant to
Section 1.4(b)(iv).
"Facility Termination Date" means the earliest to occur of (a) September
15, 1999, (b) the Purchase Termination Date, as defined in the Liquidity Asset
Purchase Agreement, which on the date of the Agreement is September 15, 1999, or
such later date designated as the Purchase Termination Date from time to time
pursuant to the Liquidity Asset Purchase Agreement (it being understood that the
Administrator shall notify the Servicer of the designation of such later date,
provided that failure to provide such notice shall not limit or otherwise affect
the obligations of the Servicer or the rights of the Administrator, the Issuer,
or any other party to the Liquidity Asset Purchase Agreement), (c) the date of
termination of the commitment under any other Program Support Agreement, (d) the
date determined pursuant to Section 2.2, (e) the date the Purchase Limit reduces
to zero pursuant to Section 1.1(c), and (f) the Purchase and Sale Termination
Date under the Purchase and Sale Agreement.
"Federal Funds Rate" means, for any period, the per annum rate set forth in
the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)". If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotation") for such day under the caption "Federal Funds Effective Rate". If on
any relevant day the appropriate rate for such previous day is not yet published
in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day
will be the arithmetic mean as determined by the Administrator of the rates for
the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Administrator.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System, or any entity succeeding to any of its principal functions.
"Final Payout Date" has the meaning set forth in the introductory paragraph
to Exhibit IV.
"Fixed Period" means, unless otherwise mutually agreed by the Administrator
and the Seller, (a) with respect to any Portion of Capital funded by the
issuance of Notes, (x) initially the period commencing on (and including) the
date of the initial purchase or funding of such Portion of Capital and ending on
(and including) the last day of the current calendar month, and (y) thereafter,
each period commencing on (and including) the first day after the last day of
the
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immediately preceding Fixed Period for such Portion of Capital and ending on
(and including) the last day of the current calendar month; and (b) with respect
to any Portion of Capital not funded by the issuance of Notes, (x) initially the
period commencing on (and including) the date of the initial purchase or funding
of such Portion of Capital and ending on (but excluding) the next following
Settlement Date, and (y) thereafter, each period commencing on (and including) a
Settlement Date and ending on (but excluding) the next following Settlement
Date; provided, that
(i) any Fixed Period with respect to any Portion of Capital
not funded by the issuance of Notes which would otherwise end on a
day which is not a Business Day shall be extended to the next
succeeding Business Day; provided, however, if Discount in respect
of such Fixed Period is computed by reference to the Eurodollar
Rate, and such Fixed Period would otherwise end on a day which is
not a Business Day, and there is no subsequent Business Day in the
same calendar month as such day, such Fixed Period shall end on the
next preceding Business Day;
(ii) in the case of any Fixed Period for any Portion of
Capital of the Purchased Interest which commences before the
Termination Date and would otherwise end on a date occurring after
the Termination Date, such Fixed Period shall end on such
Termination Date and the duration of each Fixed Period which
commences on or after the Termination Date shall be of such duration
as shall be selected by the Administrator or the Parallel Purchase
Administrator, as applicable;
(iii) any Fixed Period in respect of which Discount is
computed by reference to the CP Rate may be terminated at the
election of, and upon notice thereof to the Seller by, the
Administrator any time; the Portion of Capital allocated to such
terminated Fixed Period and shall accrue Discount at the Alternate
Rate.
"Funding Discount" has the meaning set forth in Section 1.5(c) of the
Purchase and Sale Agreement.
"Funding Rate" has the meaning set forth in Section 1.5(d) of the
Purchase and Sale Agreement.
"Generally Accepted Accounting Principles" or "generally accepted
accounting principles" means generally accepted accounting principles at
the time in the United States. Except as otherwise expressly provided, all
references to generally accepted accounting principles shall be applied on
a consistent basis.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary
or regulatory authority) thereof, any body or entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, including without limitation any court, and any
Person owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing.
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"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any matter, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
"Guarantor" has the meaning set forth in the preamble of the Purchase and
Sale Agreement.
"Hedging Agreement" means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest or currency exchange rate or commodity price hedging arrangement.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid (excluding deferred
compensation obligations owed to current and former directors, officers and
employees), (d) all obligations of such Person under conditional sale or other
title retention agreements relating to property acquired by such Person, (e) all
obligations of such Person in respect of the deferred purchase price of property
or services (excluding current accounts payable, measured in accordance with
generally accepted accounting principles, incurred in the ordinary course of
business), (f) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise to be secured
by) any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person
of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty supporting Indebtedness,
(j) all obligations, contingent or otherwise, of such Person in respect of
bankers' acceptances, and (k) all obligations, contingent or otherwise, with
respect to synthetic leases or securitized assets. The Indebtedness of any
Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.
"Indemnified Amounts" has the meaning set forth in Section 3.1.
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"Indemnified Party" has the meaning set forth in Section 3.1.
"Initial Purchase Date" means the date on which the initial purchase
occurred under the Amended and Restated Receivables Purchase Agreement.
"Initial Purchaser" has the meaning set forth in the preamble to the
Purchase and Sale Agreement.
"Initial Purchased Interest" has the meaning set forth in Section 1.1(a).
"Initial Purchaser Note" means the non-negotiable promissory notes, set
forth in Annex A to Purchase and Sale Agreement, issued by the Initial Purchaser
to each Originator.
"Insolvency Proceeding" means (a) any case, action or proceeding before any
court or other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidations, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit of creditors,
composition, marshaling of assets for creditors, or other, similar arrangement
in respect of its creditors generally or any substantial portion of its
creditors; in each case (a) and (b) undertaken under U.S. Federal, state or
foreign law, including the Bankruptcy Code.
"Investment Grade" means, with respect to the Rated Long Term Debt of
Solectron or any other Person, a rating of at least BBB- by Standard & Poor's
or, with respect to the Rated Long Term Debt of any Person other than Solectron
a rating of at least Baa3 by Xxxxx'x, or at least BBB- by Duff & Xxxxxx Credit
Rating Co.; provided, that if the Rated Long Term Debt of any Person other than
Solectron is rated by more than one of the foregoing rating agencies, then at
least one of such rating agencies which rates such securities shall have given
them a rating at least equal to the categories specified above; and provided
further, that if Solectron or any such other Person does not have Rated
Long-Term Debt outstanding, the Administrator shall have received written
materials reasonably satisfactory to the Administrator prepared by at least one
of such rating agencies to the effect that if such Person did have Rated Long
Term Debt securities outstanding, such securities would receive at least such a
rating.
"Intercreditor Agreement" means the Intercreditor Agreement, dated as of
October 31, 1998, among the Issuer, the Administrator, the Parallel Purchase
Administrator, and Solectron as the same may be amended, supplemented or
otherwise modified from time to time.
"Issuer" has the meaning set forth in the preamble to the Agreement.
"LIBOR" means the rate of interest per annum determined by the
Liquidity Agent to be the arithmetic mean (rounded upward to the nearest
1/16th of 1%) of the rates of interest per annum notified to the Liquidity
Agent by each Reference Bank as the rate of interest at which dollar
deposits in the approximate amount of the Capital associated with such
Fixed Period would be offered to major banks in the London interbank
market at their
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request at or about 11:00 a.m. (London time) on the second Business Day
prior to the commencement of such Fixed Period.
"Lien" means any mortgage, pledge, hypothecation, assignment deposit
arrangement, security interest, encumbrance, lien (statutory or otherwise) or
charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any financing or similar
statement or notice filed under the UCC or other similar recording or notice
statute, and any lease in the nature thereof).
"Liquidity Agent" means Bank of America in its capacity as Liquidity Agent
pursuant to the Liquidity Asset Purchase Agreement.
"Liquidity Asset Purchase Agreement" means that certain Liquidity Asset
Purchase Agreement dated as of September 17, 1997 among Bank of America and the
other financial institutions listed therein as the Purchasers, Bank of America,
as Liquidity Agent and Administrator, and the Issuer, as amended, supplemented
or otherwise modified from time to time.
"Lock-Box Account" means a bank account subject to a Lock-Box Agreement.
"Lock-Box Agreement" means an agreement, in substantially the form of Annex
A, among the Seller, one or more Originators, the Servicer, the Issuer, the
Administrator and a Lock-Box Bank.
"Lock-Box Bank" means any of the banks or other financial institutions
holding one or more Lock-Box Accounts.
"Loss Discount" has the meaning set forth in Section 1.4(b) of the Purchase
and Sale Agreement.
"Loss Percentage" means, on any date, the greater of (i) the Loss Ratio on
such date, and (ii) 12%.
"Loss Ratio" means the result (expressed as a percentage), computed as of
each Month-End Date, of (a) 2.0 multiplied by (b) the highest average of the
Sales-Based Default Ratio for any three consecutive calendar months that
occurred during the preceding 12 consecutive calendar months ending on such
Month-End Date multiplied by (c) a fraction having (i) a numerator equal to the
sum of the aggregate amounts payable pursuant to invoices giving rise to
Receivables (without giving effect to any payments received with respect to such
invoices) that were generated by each Originator during the six calendar months
ending on such Month-End Date, and (ii) a denominator equal to the aggregate
Outstanding Balance of all Eligible Receivables, as of such Month-End Date.
"Loss Reserve" means, for the Purchased Interest under the Agreement or the
Parallel Purchase Agreement, on any date, an amount equal to the greater of:
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(a): (LP + DP) x (AER); and
(b): (16.0%) x (AER)
where:
LP = the Loss Percentage for such Purchased Interest on such date.
DP = the Dilution Percentage for such Purchased Interest on such date.
AER = the aggregate Outstanding Balance of all Eligible Receivables at the
close of business of the Servicer on such date.
"Majority Parallel Purchasers" means, at any time, Parallel
Purchasers with Percentages under the Parallel Purchase Agreement that are more
than 50% in the aggregate.
"Maximum Parallel Purchase" means, with respect to each Parallel
Purchaser and the Parallel Purchase Agreement, the maximum amount of Capital
which such Parallel Purchaser is obligated to pay in respect of the Purchased
Interest acquired by the Parallel Purchasers under such Parallel Purchase
Agreement, as set forth below its signature to such Parallel Purchase Agreement
or in the assignment pursuant to which it became a Parallel Purchasers
thereunder, as such amount may be modified
(w) in connection with any subsequent assignment pursuant to Section
6.3 of the Parallel Purchase Agreement,
(x) in connection with a change in the Purchase Limit applicable to
such Parallel Purchase Agreement pursuant to Section 6.1 of the Parallel
Purchase Agreement,
(y) as provided in Section 1.1(a) of the Parallel Purchase Agreement
to reflect the aggregate outstanding Capital of the Purchased Interest
under the Agreement and such Parallel Purchase Agreement, or
(z) in connection with a termination of such Purchaser's Purchase
Commitment pursuant to Section 1.1(b) of the Parallel Purchase Agreement.
"Material Indebtedness" means Indebtedness, or obligations in
respect of one or more Hedging Agreements, of any one or more of the Solectron
Parties in an aggregate principal amount exceeding $10,000,000. For purposes of
determining Material Indebtedness, the "principal amount" of the obligations of
any Solectron Party in respect of any Hedging Agreement at any time shall be the
maximum aggregate amount (giving effect to any netting agreements) that such
Solectron Party would be required to pay if such Hedging Agreement were
terminated at such time.
"Month-End Date" means the last day of a calendar month.
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"Moody's" means Xxxxx'x Investors Service, Inc., or any successor thereto.
"Net Receivables Pool Balance" means at any time the Outstanding Balance of
Eligible Receivables then in the Receivables Pool reduced by the aggregate
amount by which the Outstanding Balance of Eligible Receivables (other than
Defaulted Receivables) of each Obligor then in the Receivables Pool exceeds the
product of (A) the Applicable Concentration Percentage for such Obligor
multiplied by (B) the Outstanding Balance of the Eligible Receivables then in
the Receivables Pool.
"Normal Concentration Percentage" for any Obligor means at any time 3%.
"Notes" means short-term promissory notes issued or to be issued by the
Issuer to fund its investments in accounts receivable or other financial assets.
"Obligor" means, with respect to any Receivable, the Person obligated to
make payments pursuant to the Contract relating to such Receivable.
"Original Purchase and Sale Agreement" means the Purchase and Sale
Agreement dated as of September 17, 1997 among Solectron California Corporation,
as an Originator, Solectron Corporation, as an Originator, as Guarantor and as
Servicer, and Solectron Funding Corporation, as the Initial Purchaser, as
amended, amended and restated or otherwise modified in accordance with its terms
and in effect immediately prior to the effectiveness of the Purchase and Sale
Agreement.
"Originator" means each of Solectron Corporation, Solectron California
Corporation, and Solectron Technology, Inc.
"Original Receivables Purchase Agreement" means the Receivables Purchase
Agreement dated as of September 17, 1997 among Solectron Funding Corporation, as
Seller, Solectron Corporation, individually and as Servicer, Receivables Capital
Corporation, as Issuer, and Bank of America National Trust and Savings
Association, as Administrator, as the same may be amended, supplemented or
otherwise modified from time to time.
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
"Payment Date" has the meaning set forth in Section 1.4 of the Purchase and
Sale Agreement.
"Parallel Purchase Administrator" has the meaning set forth in the preamble
to the Parallel Purchase Agreement.
"Parallel Purchase Agreement" means the Parallel Asset Purchase Agreement
dated as of October 31, 1998 among the Seller, the Servicer, certain financial
institutions from time to time
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parties thereto, as the Parallel Purchasers, the Bank of America, as Parallel
Purchase Administrator, as the same may be amended, supplemented or otherwise
modified from time to time.
"Parallel Purchase Termination Date", with respect to each Parallel
Purchaser, has the meaning set forth in Section 6.6 of the Parallel Purchase
Agreement.
"Parallel Purchaser", with respect to each Parallel Purchaser, has
the meaning set forth in the preamble to the Parallel Purchase Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in section
3(2) of ERISA, which is subject to title IV of ERISA (other than a multiemployer
plan as defined in section 4001(a)(3) of ERISA), and to which Solectron,
Solectron California Corporation or the Seller or any corporation, trade or
business that is, along with Solectron, Solectron California Corporation or the
Seller, a member of a controlled group of corporations or a controlled group of
trades or businesses, as described in sections 414(b) and 414(c), respectively,
of the Internal Revenue Code of 1986, as amended or section 4001 of ERISA may
have any liability, including any liability by reason of having been a
substantial employer within the meaning of section 4063 of ERISA at any time
during the preceding five years, or by reason of being deemed to be a
contributing sponsor under section 4069 of ERISA.
"Percentages" has the meaning set forth in Section 1.2(b) of the Parallel
Purchase Agreement.
"Permitted Liens" means:
(a) Liens imposed by law by any Governmental Authority for taxes
that are not yet due or are being contested in compliance with Section
5.04 of the Solectron Credit Agreement;
(b) carriers', warehousemen's, mechanics', material men's,
repairmen's and other like Liens imposed by law, and any other
involuntary, statutory or common law Lien arising in the ordinary course
of business and securing obligations that are not overdue by more than 30
days or are being contested in compliance with Section 5.04 of the
Solectron Credit Agreement;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
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(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary
course of business;
(e) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of any Solectron Party;
(f) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under the Solectron
Credit Agreement;
(g) Liens which constitute rights of set-off of a customary nature
or banker's Liens with respect to amounts on deposit arising by operation
of law in connection with arrangements entered into with banks in the
ordinary course of business;
(h) Liens in favor or customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods; and
(i) leases or subleases and licenses and sublicenses granted to
others in the ordinary course of business not interfering in any material
respect with the business of any of the Solectron Parties taken as a
whole, and any interest or title of any lessor or licensor under any lease
or license;
provided that the term "Permitted Liens" shall not include any Lien securing
Indebtedness.
"Person" means an individual, partnership, corporation, joint stock
company, trust (including a business trust), unincorporated association, joint
venture, limited liability company or other entity, or a government or any
political subdivision or agency thereof.
"Pool Receivable" means a Receivable in the Receivables Pool.
"Portion of Capital" means, at any time, each portion of the Capital
of the Purchased Interest having the same Fixed Period and accruing Discount by
reference to the same Rate Type at such time. In addition, at any time when the
Capital of the Purchased Interest is not divided into more than one portion,
"Portion of Capital" means 100% of the Capital of the Purchased Interest.
"PPA-Related Person" has the meaning assigned thereto in Section 5.2
of the Parallel Purchase Agreement.
"Program Support Agreement" means and includes the Liquidity Asset
Purchase Agreement and any other agreement entered into by any Program Support
Provider providing for the issuance of one or more letters of credit for the
account of the Issuer, the issuance of one or more surety bonds for which the
Issuer is obligated to reimburse the applicable Program Support Provider
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for any drawings thereunder, the sale by the Issuer to any Program Support
Provider of the Purchased Interest (or portions thereof) and/or the making of
loans and/or other extensions of credit to the Issuer in connection with the
Issuer's securitization program, together with any letter of credit, surety bond
or other instrument issued thereunder (but excluding any discretionary advance
facility provided by the Administrator).
"Program Support Provider" means and includes any Purchaser and any other
or additional Person (other than any customer of the Issuer) now or hereafter
extending credit or having a commitment to extend credit to or for the account
of, or to make purchases from, the Issuer or issuing a letter of credit, surety
bond or other instrument to support any obligations arising under or in
connection with the Issuer's securitization program.
"Purchase and Sale Agreement" means the Amended and Restated Purchase and
Sale Agreement dated as of February 22, 1999 among Solectron California
Corporation, as an Originator; Solectron Technology, Inc., as an Originator;
Solectron Corporation, as an Originator, as Guarantor, and as Servicer, and
Solectron Funding Corporation as the Initial Purchaser, as the same may be
amended, amended and restated or otherwise modified in accordance with its
terms.
"Purchase and Sale Termination Date" means date determined in accordance
with Section 2.3 of the Purchase and Sale Agreement.
"Purchase and Sale Termination Event" has the meaning set forth in Exhibit
IV to the Purchase and Sale Agreement.
"Purchase Discount" has the meaning set forth in Section 1.5 of the
Purchase and Sale Agreement.
"Purchase Limit" means the lesser of (i) $220,000,000, as such amount may
be reduced pursuant to Section 1.1(c) and (ii) (A) the aggregate of the Maximum
Liquidity Purchase (as defined in the Liquidity Asset Purchase Agreement) of the
Purchasers under the Liquidity Asset Purchase Agreement less (B) the aggregate
of the Discount of the existing Fixed Periods (for the entirety of such Fixed
Periods), as such amount may be reduced pursuant to Section 1.1(c). References
to the unused portion of the Purchase Limit shall mean, at any time, the
Purchase Limit minus the then outstanding Capital of the Purchased Interest
under the Agreement.
"Purchase Period" has the meaning set forth in Section 1.4 of the Purchase
and Sale Agreement.
"Purchase Price" has the meaning set forth in Section 1.4 of the Purchase
and Sale Agreement.
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"Purchased Interest" means, with respect to each of the Agreement and the
Parallel Purchase Agreement, at any time, the undivided percentage ownership
interest in (i) each and every Pool Receivable now existing or hereafter
arising, other than any Pool Receivable that arises on or after the Facility
Termination Date, (ii) all Related Security with respect to such Pool
Receivables, and (iii) all Collections with respect to, and other proceeds of,
such Pool Receivables and Related Security. Such undivided percentage interest
shall be computed as
C + DR + LR + SFR
-----------------
NRB
where:
C = the Capital of the Purchased Interest under the
Agreement or the Parallel Purchase Agreement, as
applicable, at the time of computation.
DR = the Discount Reserve of the Purchased Interest under
the Agreement or the Parallel Purchase Agreement, as
applicable, at the time of computation.
LR = the Loss Reserve of the Purchased Interest under the
Agreement or the Parallel Purchase Agreement, as
applicable, at the time of computation.
SFR = the Servicing Fee Reserve of the Purchased Interest
under the Agreement or the Parallel Purchase Agreement,
as applicable, at the time of computation.
NRB = the Net Receivables Pool Balance at the time of computation.
The separate Purchased Interest under each of the Agreement and the Parallel
Purchase Agreement shall be determined from time to time pursuant to the
provisions of Section 1.3 of each of the Agreement and the Parallel Asset
Purchase Agreement, as applicable, and a each such Purchased Interest shall be
computed separately under each such agreement.
"Purchaser" has the meaning set forth in Section 5.3(b).
"Rate Type" means the Eurodollar Rate, the Base Rate or the CP Rate.
"Rate Variance Factor" means a number greater than one that reflects
the potential variance in selected interest rates over a period of time
designated by the Administrator, in the case of the Purchased Interest under the
Agreement and the Parallel Purchase Administrator, in the case of the Purchased
Interest under the Parallel Purchase Agreement as reasonably specified by the
Administrator or the Parallel Purchase Administrator, as applicable from time to
time, notified to
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the Seller and set forth in the Seller Report in accordance with the provisions
thereof; provided that the "Rate Variance Factor" may be changed from time to
time upon at least five days' prior notice by the Administrator or the Parallel
Purchase Administrator, as applicable, to the Servicer.
"Rated Long Term Debt" means, with respect to any Person, at any time, the
long-term, senior, unsecured, noncredit-enhanced debt of such Person that is
rated by any nationally recognized statistical rating agency.
"Rated Short Term Debt" means, with respect to any Person, at any
time, the short-term, senior, unsecured, noncredit-enhanced debt of such Person
that is rated by any nationally recognized statistical rating agency.
"Receivable" means any indebtedness and other obligations owed to any
Originator or any rights of any Originator to payment from or on behalf of an
Obligor whether constituting an account, chattel paper, instrument or general
intangible, arising in connection with the sale or lease of goods or the
rendering of services by such Originator, and includes, without limitation, the
obligation to pay any finance charges, fees and other charges with respect
thereto. Indebtedness and other obligations arising from any one transaction,
including, without limitation, indebtedness and other obligations represented by
an individual invoice or agreement, shall constitute a Receivable separate from
a Receivable consisting of the indebtedness and other obligations arising from
any other transaction.
"Receivables Pool" means at any time all of the then outstanding
Receivables sold or contributed to the Seller pursuant to the Purchase and Sale
Agreement or the Subscription Agreement.
"Reference Bank" means Bank of America.
"Related Assets" has the meaning set forth in Section 1.2 of the Purchase
and Sale Agreement.
"Related Security" means with respect to any Receivable:
(i) all of any Originator's interest in any goods (including
returned goods), and documentation or title evidencing the shipment or
storage of any goods (including returned goods), relating to any sale
giving rise to such Receivable;
(ii) all other security interests or liens and property subject
thereto from time to time purporting to secure payment of such Receivable,
whether pursuant to the Contract related to such Receivable or otherwise,
together with all UCC financing statements or similar filings signed by an
Obligor relating thereto; and
(iii) the related Contract and all guaranties, indemnities,
insurance and other agreements or arrangements of whatever character from
time to time supporting or securing payment of such Receivable or
otherwise relating to such Receivable whether pursuant to the Contract
related to such Receivable or otherwise.
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"Restricted Payments" has the meaning given thereto in paragraph (m) of
Exhibit
IV.
"Sales-Based Default Ratio" means the ratio (expressed as a percentage)
computed as of each Month-End Date having (a) a numerator that is the sum of (i)
the aggregate Outstanding Balance of Receivables that remained outstanding 151
to 180 days after their respective original customer billing dates, as
determined as of such Month-End Date, plus (ii) the aggregate Outstanding
Balance of Receivables that were written off as uncollectible during the most
recently ended calendar month and that, if not so written off, would have been
outstanding not more than 180 days after their respective original customer
billing dates, as determined as of that Month-End Date; provided that for
Solectron Technology for each Month-End Date prior to January 1, 1999 the
numerator shall be the sum of (i) the aggregate Outstanding Balance of
Receivables that remained outstanding 61-90 days after their respective due
dates, as determined as of such Month-End Date, plus (ii) the aggregate
Outstanding Balance of Receivables that were written off as uncollectible during
the most recently ended calendar month and that, if not so written off, would
have been outstanding not more than 90 days after their respective due dates, as
determined as of such Month-End Date, and (b) a denominator that is the
aggregate amount payable pursuant to invoices giving rise to Receivables
(without giving effect to any payments received on such invoices) that were
generated by the Originators during the calendar month that occurred six
calendar months prior to the calendar month ending on such Month-End Date.
"Sales-Based Dilution Ratio" means, for any calendar month, the ratio
(expressed as a percentage) having (a) a numerator equal to the aggregate amount
of payments owed by the Seller pursuant to Section 1.4(e) during such period and
(b) a denominator equal to the aggregate amounts payable pursuant to invoices
giving rise to Receivables (without giving effect to any payments received with
respect to such invoices) that were generated by the Originators during the
preceding calendar month (so that, for example, if the calendar month specified
in clause (a) corresponds to the month of March, the calendar month in this
clause (b) would be the one corresponding to the month of February).
"Seller" has the meaning set forth in the preamble to the Agreement.
"Seller Report" means a report, in form and substance satisfactory to the
Administrator, furnished by the Servicer to the Administrator pursuant to the
Agreement.
"Servicer" has the meaning set forth in the preamble to the Agreement.
"Servicer's Fee Percentage" has the meaning set forth in Section 1.5(d) of
the Purchase and Sale Agreement.
"Servicing Fee" shall mean the fee referred to in Section 4.6.
"Servicing Fee Reserve" for the Purchased Interest under the Agreement or
the Parallel Asset Purchase Agreement at any time means the sum of (i) the
unpaid Servicing Fee relating to the Purchased Interest under such agreement
accrued to such time, plus (ii) an amount equal to (a) the Capital of such
Purchased Interest at the time of computation multiplied by (b) the product of
(x) the percentage per annum at which the Servicing Fee is accruing on such date
and (y)
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a fraction having as its numerator the product of (i) the Average Maturity (as
in effect on such date) times (ii) 2.0 and 360 as its denominator.
"Settlement Period" for each Portion of Capital means each period
commencing on the first day and ending on the last day of each Fixed Period for
such Portion of Capital and, on and after the Termination Date, such period
(including, without limitation, a period of one day) as shall be selected from
time to time by the Administrator or, in the absence of any such selection, each
period of 30 days from the last day of the immediately preceding Settlement
Period.
"Solectron" has the meaning set forth in the preamble to the Agreement.
"Solectron Credit Agreement" shall mean the Credit Agreement dated as of
May 1, 1997, among Solectron, the banks party thereto, Bank of America, as agent
and issuing bank, and BancAmerica Securities, Inc., as arranger, as amended,
supplemented or otherwise modified from time to time.
"Solectron Party" means Solectron (whether acting as an Originator, as
Guarantor or Servicer), Solectron California Corporation, Solectron Technology,
Inc., the Seller or any of their respective Affiliates.
"Solvent" means, as to any Person at any time, that (a) the fair value of
the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(32) of the Bankruptcy Code and, in the alternative, for purposes of
applicable state fraudulent conveyance law; (b) the present fair saleable value
of the property of such Person is not less than the amount that will be required
to pay the probable liability of such Person on its debts as they become
absolute and matured; (c) such Person is able to realize upon its property and
pay its debts and other liabilities (including disputed, contingent and
unliquidated liabilities) as they mature in the normal course of business; (d)
such Person does not intend to, and does not believe that it will, incur debts
or liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (e) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"Special Obligor" means, as of the date hereof, International Business
Machines Corp., and thereafter, shall include any other Obligor designated as
such in writing by the Administrator to the Servicer, until such time as the
Administrator shall have notified the Servicer in writing that such Obligor is
no longer a Special Obligor hereunder (it being understood that the
Administrator shall not notify the Servicer that an Obligor is no longer a
Special Obligor absent a good-faith determination on its part that such
Obligor's credit has declined).
"Standard & Poor's" or "S&P" means Standard & Poor's Rating Services, a
division of The McGraw Hill Companies, Inc., or any successor thereto.
I-24
"Subscription Agreement" means the Subscription Agreement dated as of
September 17, 1997 between Solectron Funding Corporation and Solectron
Corporation as the same may be amended, amended and restated or otherwise
modified in accordance with its terms.
"Tangible Net Worth" means total stockholders' equity minus goodwill,
patents, trade names, trade marks, copyrights, franchises, organizational
expense, deferred assets other than prepaid insurance and prepaid taxes and such
other assets as are properly classified as "intangible assets", for any
corporation as determined in accordance with generally accepted accounting
principles.
"Termination Date" means the earlier of (i) the Business Day which the
Seller so designates by notice to the Administrator at least five days in
advance and (ii) the Facility Termination Date.
"Termination Day" means (i) each day on which the conditions set forth in
Section 2 of Exhibit II are not satisfied and (ii) each day which occurs on or
after the Termination Date.
"Termination Discount" means, for the Purchased Interest under the
Agreement or the Parallel Purchase Agreement on any date, an amount equal to the
Rate Variance Factor on such date multiplied by the product of (i) the Capital
of such Purchased Interest on such date and (ii) the product of (a) the Base
Rate for such Purchased Interest for a 30-day Fixed Period deemed to commence on
such date and (b) a fraction having as its numerator the product of (i) the
Average Maturity (as in effect on such date) times (ii) 2.0 and 360 as its
denominator.
"Termination Event" has the meaning specified in Exhibit V.
"Termination Fee" means, for any Fixed Period during which a Termination
Day occurs, the amount, if any, by which (i) the additional Discount (calculated
without taking into account any Termination Fee or any shortened duration of
such Fixed Period pursuant to clause (c)(iv) of the definition thereof) which
would have accrued during such Fixed Period on the reductions of Capital of the
Purchased Interest relating to such Fixed Period had such reductions remained as
Capital, exceeds (ii) the income, if any, received by the Issuer from the Issuer
investing the proceeds of such reductions of Capital, as reasonably determined
by the Administrator, which determination shall be binding and conclusive for
all purposes, absent manifest error.
"Transaction Documents" means the Agreement, the Purchase and Sale
Agreement, the Lock-Box Agreements, the Liquidity Asset Purchase Agreement, the
Initial Purchaser Notes, the Subscription Agreement, the Parallel Purchase
Agreement, the Intercreditor Agreement and all other certificates, instruments,
UCC financing statements, reports required under the Transaction Documents,
notices and agreements executed or delivered under or in connection with the
Agreement, in each case as the same may be amended, amended and restated or
otherwise modified from time to time in accordance with their respective terms
and, if applicable, in accordance with the terms of the Agreement.
"UCC" means the Uniform Commercial Code as from time to time in effect in
the applicable jurisdiction.
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"Unmatured Termination Event" means, with respect to the Purchase and Sale
Agreement or the Agreement, an event which, with the giving of notice or lapse
of time, or both, would constitute a Purchase and Sale Termination Event or a
Termination Event, as the case may be.
"Welfare Plan" means a "welfare plan", as such term is defined in Section
3(1) of ERISA.
Other Terms. All accounting terms not specifically defined in the
Agreement or in any other Transaction Document shall be construed in accordance
with generally accepted accounting principles. All terms used in Article 9 of
the UCC in effect in the State of Illinois, and not specifically defined in the
Agreement or in any other Transaction Document, are used herein as defined in
such Article 9. Unless the context otherwise requires, when used in the
Agreement or in any other Transaction Document, "or" means "and/or", and
"including" (and with correlative meaning "include" and "includes") means
including without limiting the generality of any description preceding such
term.
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EXHIBIT II
CONDITIONS OF PURCHASES
1. Conditions Precedent to the Effectiveness of this Agreement. Any
purchase under this Agreement is subject to the conditions precedent that the
Administrator shall have received on or before the date of such purchase the
following, each in form and substance (including the date thereof) satisfactory
to the Administrator:
(a) A counterpart of each of the following, duly executed by the parties
thereto: (i) of this Agreement, (ii) Amendment No. 1 to the Parallel Asset
Purchase Agreement and (iii) Amendment No. 4 to the Liquidity Asset Purchase
Agreement.
(b) A duly executed counterpart of the Purchase and Sale Agreement.
(c) Certified copies of (i) the resolutions of the Board of Directors of
each of Solectron Technology, Inc. and the Seller authorizing the execution,
delivery, and performance by Solectron Technology, Inc. and the Seller,
respectively, of the Agreement and the other Transaction Documents, (ii) all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to the Agreement and the other Transaction
Documents and (iii) the certificate of incorporation and by-laws of Solectron
Technology, Inc.
(d) A certificate of the Secretary or Assistant Secretary of Solectron
Technology, Inc., certifying the names and true signatures of the officers of
Solectron Technology, Inc., authorized to sign the Transaction Documents to
which it is party. Until the Administrator receives a subsequent incumbency
certificate from Solectron Technology, Inc., in form and substance satisfactory
to the Administrator, the Administrator shall be entitled to rely on the last
such certificate delivered to it by Solectron Technology, Inc., as the case may
be.
(e) Acknowledgment copies, or time stamped receipt copies, of proper UCC
financing statements, duly filed on or before the Effective Date under the UCC
of all jurisdictions that the Administrator may deem necessary or desirable in
order to perfect the interests of the Seller, the Administrator and the Issuer
contemplated by the Agreement and the Purchase and Sale Agreement.
(f) Acknowledgment copies, or time stamped receipt copies, of proper
financing statements, if any, necessary to release all security interests and
other rights of any Person in the Receivables, Contracts or Related Security
previously granted by the Seller and each Originator.
(g) Completed UCC requests for information, dated on or before the
Effective Date, listing the financing statements referred to in subsection (e)
above and all other effective financing statements filed in the jurisdictions
referred to in subsection (e) above that name the Seller or an Originator as
debtor, together with copies of such other financing statements (none of which
shall cover any Receivables, Contracts or Related Security), and similar search
reports with respect to federal tax liens and liens of the PBGC and judgment
liens in such jurisdictions as the
II-1
Administrator may request, showing no such liens on any of the Receivables,
Contracts or Related Security.
(h) Copies of executed Lock-Box Agreements with the Lock-Box Banks.
(i) A favorable opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, counsel for
Solectron California Corporation, Solectron Technology, Inc., the Seller and
Solectron Corporation (as an Originator, as Servicer and Guarantor), as to
corporate matters, security interests (including perfection and priority), and
as to such other matters as the Administrator may reasonably request.
(j) A favorable opinion of Xxxxxx Xxxxxxxx Xxxxxx & Xxxxxx, as to true sale
and substantive consolidation.
(k) Satisfactory results of a review and audit of each Originator's and the
Servicer's collection, operating and reporting systems, Credit and Collection
Policy, historical receivables data and accounts, including satisfactory results
of a review of each Originator's and the Servicer's operating location(s) and
satisfactory review and approval of the Eligible Receivables in existence on the
date of the initial purchase under the Agreement.
(l) A completed Seller Report representing the performance of the
Receivables for the month prior to closing.
(m) Evidence of payment by each Originator, Solectron and the Seller of all
accrued and unpaid fees (including those contemplated by the letter agreement
referred to in Section 1.5), costs and expenses to the extent then due and
payable on the date thereof, together with Attorney Costs of the Administrator
to the extent invoiced prior to or on such date, plus such additional amounts of
Attorney Costs as shall constitute the Administrator's reasonable estimate of
Attorney Costs incurred or to be incurred by it through the closing proceedings
(provided that such estimate shall not thereafter preclude final settling of
accounts between such Persons and the Administrator) and, without limiting the
foregoing, including any such costs, fees and expenses arising under or
referenced in Section 5.4.
(n) A letter agreement between the Seller and the Administrator
contemplated by Section 1.5.
(o) The Initial Purchaser Notes.
(p) Good standing certificates with respect to each of Solectron California
Corporation, Solectron Technology, Inc., the Seller and the Servicer issued by
the Secretaries of the States of California and (with respect to the Seller and
Solectron) Delaware.
(q) A certificate from an officer of Solectron Corporation to the effect
that the Seller has a Tangible Net Worth of at least $30,000,000.
(r) Such other approvals, opinions or documents as the Administrator
or Purchasers may reasonably request.
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2. Conditions Precedent to All Purchases and Reinvestments. Each
purchase and each reinvestment shall be subject to the further conditions
precedent that:
(a) in the case of each purchase, the Servicer shall have delivered
to the Administrator on or prior to such purchase, in form and substance
satisfactory to the Administrator, a completed Seller Report with respect to the
immediately preceding calendar month, dated within 10 days prior to the date of
such purchase together with a listing by Obligor of all Receivables and such
additional information as may reasonably be requested by the Administrator;
(b) on the date of such purchase or reinvestment the following
statements shall be true (and acceptance of the proceeds of such purchase or
reinvestment shall be deemed a representation and warranty by the Seller that
such statements are then true):
(i) the representations and warranties contained in paragraphs (e),
(f), (h), (i), (j), (k), (o), (q), (r) and (t) of Exhibit III are true and
correct on and as of the date of such purchase or reinvestment as though
made on and as of such date; and
(ii) no event has occurred and is continuing, or would result from
such purchase or reinvestment, that constitutes a Termination Event or
that would constitute a Termination Event but for the requirement that
notice be given or time elapse or both; and
(c) the Administrator shall have received such other approvals,
opinions or documents as it may reasonably request.
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EXHIBIT III
REPRESENTATIONS AND WARRANTIES
Each of the Seller and the Servicer, Sub-Servicers, represents and
warrants as follows with respect to itself and its respective properties, as
applicable:
(a) It is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction under which it was organized,
and is duly qualified to do business and is in good standing in every other
jurisdiction where the failure to so qualify could reasonably be expected to
result in a material adverse effect on its business, assets, operations,
prospects or condition, financial or otherwise, and those of any of its
subsidiaries taken as a whole, its ability to perform its obligations under the
Agreement, or the rights of or benefits available under any Transaction Document
to the Issuer or the Administrator.
(b) The execution, delivery and performance by it of the Agreement
and the other Transaction Documents to which it is a party, including, in the
case of the Seller, the Seller's use of the proceeds of purchases and
reinvestments, (i) are within its corporate powers, (ii) have been duly
authorized by all necessary corporate action, (iii) do not contravene or result
in a default under or conflict with (1) its charter or by-laws, (2) any material
law, rule or regulation applicable to it, (3) any contractual restriction
binding on or affecting it or its property (including, without limitation the
Solectron Credit Agreement) or (4) any order, writ, judgment, award, injunction
or decree binding on or affecting the Seller or its property, and (iv) do not
result in or require the creation of any Adverse Claim upon or with respect to
any of its properties. The Agreement and the other Transaction Documents to
which it is a party have been duly executed and delivered by it.
(c) No authorization or approval or consent or other action by, and
no notice to or filing with, any Governmental Authority or other Person is
required for the due execution, delivery and performance by it of the Agreement
or any other Transaction Document to which it is a party.
(d) Each of the Agreement and the other Transaction Documents to
which it is a party constitutes the legal, valid and binding obligation of it
enforceable against it in accordance with its terms.
(e) The balance sheets of Solectron and its subsidiaries, in each
case as at September 30, 1998, and the related statements of income and retained
earnings of the Servicer and its subsidiaries, in each case for the fiscal
period then ended, copies of which have been furnished to the Administrator,
fairly present the financial condition of the Servicer and its subsidiaries, as
at such date and the results of the operations of the Servicer and its
subsidiaries, for the period ended on such date, all in accordance with
generally accepted accounting principles consistently applied, and since the
applicable date of each such balance sheets and related statements there has
been no material adverse change in the business, operations, property or
financial or other condition or operations of the Servicer, or any of its
subsidiaries, the ability of the Servicer to perform its obligations under the
Agreement or the other Transaction Documents or, in the case of the Seller,
III-1
the collectibility of the Receivables, or which affects the legality, validity
or enforceability of the Agreement or the other Transaction Documents.
(f) There is no pending or threatened action or proceeding affecting
the Seller or the Servicer or the Sub-Servicers or any of their subsidiaries
before any Governmental Authority or arbitrator (x) which could materially
adversely affect (i) the business, operations, prospects, property, financial or
other condition or operations of the Seller or the Servicer or either
Sub-Servicer or any of their subsidiaries, (ii) the ability of the Seller or the
Servicer or either Sub-Servicer to perform its obligations under the Agreement
or the other Transaction Documents, (iii) the ability of Solectron to pay its
obligations under the Solectron Credit Agreement or (iv) the collectibility of
the Receivables, or (y) which affects or purports to affect the legality,
validity or enforceability of the Agreement or the other Transaction Documents.
(g) No proceeds of any purchase or reinvestment in respect of the
Purchased Interest will be used to acquire any equity security of a class which
is registered or required to be registered pursuant to Section 12 of the
Securities Exchange Act of 1934.
(h) The Seller is the legal and beneficial owner of the Pool
Receivables and Related Security, subject to the interest of (i) the
Administrator on its behalf and on behalf of the Issuer and the (ii) Parallel
Purchase Administrator, on its behalf and on behalf of the Parallel Purchasers
therein, free and clear of any Adverse Claim; upon each purchase or
reinvestment, the Administrator, on its behalf and on behalf of the Issuer shall
acquire a valid and enforceable perfected undivided percentage ownership
interest, to the extent of the Purchased Interest, in each Pool Receivable then
existing or thereafter arising and in the Related Assets with respect thereto,
free and clear of any Adverse Claim; the Agreement creates a security interest
in favor of the Administrator, on its behalf and on behalf of the Issuer in
Seller's right, title and interest in, to and under the items described in
Section 1.2(d), and the Administrator, on its behalf and on behalf of the
Issuer,, has a first priority perfected security interest in such items, free
and clear of any Adverse Claims. Each Receivable constitutes an "account" as
such term is defined in the UCC. No effective financing statement or other
instrument similar in effect covering any Contract or any Pool Receivable or
Related Asset or any Lock Box Account (or other items covered by Section 1.2(d)
of the Agreement) is on file in any recording office, except those filed in
favor of (i) the Administrator on its behalf and on behalf of the Issuer and
(ii) the Parallel Asset Purchase Administrator, on its behalf and on behalf of
the Parallel Purchasers, relating to the Agreement or the Parallel Asset
Purchase Agreement or otherwise permitted by the Transaction Documents.
(i) Each Seller Report (if prepared by the Seller or one of its
Affiliates, or to the extent that information contained therein is supplied by
the Seller or an Affiliate), information, exhibit, financial statement,
document, book, record or report furnished or to be furnished at any time by or
on behalf of the Seller to the Administrator in connection with the Agreement is
or will be accurate in all material respects as of its date or (except as
otherwise disclosed to the Administrator at such time) as of the date so
furnished, and no such item contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order
to make the statements contained therein, in the light of the circumstances
under which they were made, not misleading.
III-2
(j) The principal place of business and chief executive office (as
such terms are used in the UCC) of the Seller and the office where the Seller
keeps its records concerning the Receivables are located at the address referred
to in paragraph (b) of Exhibit IV.
(k) The names and addresses of all the Lock-Box Banks, together with
the account numbers of the Lock-Box Accounts, are specified in Schedule II to
the Agreement (or at such other Lock-Box Banks and/or with such other Lock-Box
Accounts as have been notified to the Administrator in accordance with the
Agreement). The Lock-Box Banks have complied with all of the terms of the
Lock-Box Agreements.
(l) It is not in violation of any order of any court, arbitrator or
Governmental Authority.
(m) Neither it nor any of its Affiliates of has any direct or
indirect ownership or other financial interest in the Issuer.
(n) No proceeds of any purchase or reinvestment will be used for any
purpose that violates any applicable law, rule or regulation, including, without
limitation, Regulation U of the Federal Reserve Board.
(o) Each Pool Receivable included as an Eligible Receivable in the
calculation of the Net Receivables Pool Balance, exists and is an Eligible
Receivable as of the date of such calculation.
(p) No event has occurred and is continuing, or would result from a
purchase in respect of, or reinvestment in respect of the Purchased Interest or
from the application of the proceeds therefrom, which constitutes a Termination
Event.
(q) The Seller has accounted for each sale of undivided percentage
ownership interests in Receivables in its books and financial statements as
sales, consistent with Generally Accepted Accounting Principles.
(r) It has complied in all material respects with the Credit and
Collection Policy with regard to each Pool Receivable.
(s) It has complied with all of the terms, covenants and agreements
contained in the Agreement and the other Transaction Documents and applicable to
it.
(t) It is Solvent; and at the time of (and immediately after) each
purchase and reinvestment by the Purchaser, it shall have been Solvent.
(u) The Seller's complete corporate name is set forth in the
preamble to the Agreement, and the Seller does not use and has not during the
last six years used any other corporate name, trade name, doing business name or
fictitious name, except as set forth on Schedule III and except for names first
used after the date of the Agreement and set forth in a notice delivered to the
Administrator pursuant to paragraph (b)(ii) of Exhibit IV.
III-3
(v) The Seller is not, and is not controlled by, an "investment
company" registered or required to be registered under the Investment Company
Act of 1940, as amended.
III-4
EXHIBIT IV
COVENANTS
Covenants of the Seller, Sub-Servicers and the Servicer. Until the latest
of the Facility Termination Date, the date on which no Capital of or Discount in
respect of the Purchased Interest shall be outstanding and the date all other
amounts (other than in respect of unasserted indemnity claims) owed by the
Seller under the Agreement or the Parallel Asset Purchase Agreement to the
Issuer, the Administrator, the Parallel Purchase Administrator, any Parallel
Purchaser and any PPA-Related Person or other Indemnified Party or Affected
Person shall be paid in full (such latest date being referred to as the "Final
Payout Date"), each of the Seller, the Servicer and the Sub-Servicers covenants
and agrees, with respect to itself, unless otherwise indicated, as follows:
(a) Compliance with Laws, Etc. It shall comply in all material
respects with all applicable laws, rules, regulations and orders, and preserve
and maintain its corporate existence, rights, franchises, qualifications, and
privileges except to the extent that the failure so to comply with such laws,
rules and regulations or the failure so to preserve and maintain such existence,
rights, franchises, qualifications, and privileges would not materially
adversely affect the collectibility of the Receivables or the enforceability of
any related Contract or its ability to perform its obligations under any related
Contract or under the Agreement.
(b) Offices, Records and Books of Account; Change of Name, Identity,
Corporate Structure; Etc. In the case of the Seller, it
(i) shall keep its principal place of business and chief executive
office (as such terms are used in the UCC) and the office where it keeps
its records concerning the Receivables at the address set forth under its
name on the signature page to the Agreement or, upon at least 30 days'
prior written notice of a proposed change to the Administrator, at any
other locations in jurisdictions where all actions reasonably requested by
the Administrator to protect and perfect the interests of the
Administrator and the Issuer in the Receivables and related items
(including without limitation the items described in Section 1.2(d)) have
been taken and completed; and
(ii) shall provide the Administrator with at least 30 days' written
notice prior to making any change in its name or making any other change
in its identity or corporate structure (including a merger) which could
render any UCC financing statement filed in connection with this Agreement
"seriously misleading" as such term is used in the UCC; each notice to the
Administrator pursuant to this sentence shall set forth the applicable
change and the effective date thereof.
Each of the Seller, Servicer, and the Sub-Servicers also will
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing the Receivables
and related Contracts that it services in the event of the destruction of the
originals thereof), and keep and maintain all documents, books, records,
computer tapes and disks and other information reasonably necessary or advisable
for the collection of the Receivables
IV-1
that it services (including, without limitation, records adequate to permit the
daily identification of each Receivable and all Collections of and adjustments
to each existing Receivable).
(c) Performance and Compliance with Contracts and Credit and
Collection Policy. Each of the Servicer and the Sub-Servicers shall, at its
expense, cause the Originator whose accounts it services to timely and fully
perform and comply with all material provisions, covenants and other promises
required to be observed by such Originator under the Contracts related to the
Pool Receivables, and timely and fully comply in all material respects with the
Credit and Collection Policy with regard to each Receivable and the related
Contract.
(d) Ownership Interest, Etc. It shall, at its expense, take all
action necessary or desirable to establish and maintain a valid and enforceable
and perfected undivided ownership interest, to the extent of the Purchased
Interest, in the Pool Receivables and the Related Assets with respect thereto,
and a first priority perfected security interest in the items described in
Section 1.2(d), in each case free and clear of any Adverse Claim, in favor of
the Administrator and the Issuer, including, without limitation, filing UCC
financing statements and taking such other action to perfect, protect or more
fully evidence the interest of the Administrator and the Issuer under the
Agreement as the Administrator or the Issuer, through the Administrator, may
reasonably request.
(e) Sales, Liens, Etc. The Seller shall not sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create or suffer to
exist any Adverse Claim (except in favor of the Issuer and the Parallel
Purchasers) upon or with respect to, any or all of its right, title or interest
in, to or under, any item described in Section 1.2(d) including without
limitation the Seller's undivided interest in any Receivable, Related Security,
or Collections, or upon or with respect to any account to which any Collections
of any Pool Receivables are sent, or assign any right to receive income in
respect of any items contemplated by this paragraph (e).
(f) Extension or Amendment of Receivables. Except as provided in
Section 4.2(a) of the Agreement, it shall not extend the maturity or adjust the
Outstanding Balance or otherwise modify the terms of any Pool Receivable or
amend, modify or waive any term or condition of any related Contract.
(g) Change in Business or Credit and Collection Policy. It shall not
make any material change in the character of its business or in the Credit and
Collection Policy, that would adversely affect the collectibility of the
Receivables Pool or the enforceability of any related Contract or the ability of
each Originator to perform its obligations under any related Contract or the
ability of each Seller or the Servicer to perform its obligations under the
Agreement without the prior written consent of the Administrator.
(h) Audits. It shall, from time to time during regular business
hours with prior written notice to it as reasonably requested by the
Administrator, permit the Administrator, or its agents or representatives, (i)
to examine and make copies of and make abstracts from all books, records and
documents (including, without limitation, computer tapes and disks) in the
possession or under its control relating to Receivables and the Related Assets
(including, without limitation, the related Contracts and any such books,
records and documents relating to the identification of Obligors and agings,
charge-offs, offsets and delinquencies of Receivables), and (ii) to visit its
IV-2
offices and properties for the purpose of examining such materials described in
clause (i) above, and to discuss matters relating to Receivables and the Related
Assets or its performance hereunder or under the Contracts with any of its
officers, employees, agents or contractors having knowledge of such matters.
(i) Change in Lock-Box Banks, Lock-Box Accounts and Payment
Instructions to Obligors. It shall not add or terminate any bank as a Lock-Box
Bank or any account as a Lock-Box Account from those listed in Schedule II to
the Agreement, or make any change in its instructions to Obligors regarding
payments to be made to any Lock-Box Account (or related post office box), unless
the Administrator shall have consented thereto in writing and the Administrator
shall have received copies of all agreements and documents (including without
limitation Lock-Box Agreements) that it may request in connection therewith.
(j) Deposits to Lock-Box Accounts. Each of the Servicer and the
Sub-Servicers shall (i) instruct the Obligors, whose accounts it services, to
make payments of all Receivables only to one or more Lock-Box Accounts or to
post office boxes which are covered by a Lock-Box Agreement and to which only
Lock-Box Banks have access, provided that, consistent with its efforts to
maximize Collections and its month-end collection practices in effect as of the
date of the Agreement, it may permit the Obligors, whose accounts it services,
to make payments on Receivables directly to the applicable Originator so long as
the Rated Long Term Debt of Solectron is Investment Grade or otherwise with the
prior written consent of the Administrator, (ii) instruct and cause the Lock-Box
Bank, with whom it entered into a Lock-Box Agreement, to cause all items and
amounts relating to such Receivables received in such post office boxes to be
removed and deposited into a Lock-Box Account on a daily basis, and (iii)
deposit, or cause to be deposited, any Collections of Pool Receivables received
by it into Lock-Box Accounts not later than three Business Days after receipt
thereof. It will not deposit or otherwise credit, or cause or permit to be so
deposited or credited, to any Lock-Box Account cash or cash proceeds other than
Collections of Pool Receivables or interest accruing on amounts held in such
accounts.
(k) Marking of Records. It shall, at its expense, xxxx its master
data processing records relating to Pool Receivables and related Contracts,
including with a legend evidencing that the undivided percentage ownership
interests with regard to the Purchased Interest related to such Receivables and
related Contracts have been sold in accordance with the Agreement.
(l) Reporting Requirements. Servicer shall provide to the
Administrator (in multiple copies, if requested by the Administrator) the
following:
(i) as soon as available and in any event within 45 days after the
end of the first three quarters of each fiscal year of the Seller, the
Servicer, and the Sub-Servicers, balance sheets of Solectron, Solectron
California Corporation, Solectron Technology, Inc., and the Seller and of
Solectron and its subsidiaries on a consolidated basis as of the end of
such quarter, and statements of income and retained earnings of each of
Solectron, Solectron California Corporation and Solectron Technology,
Inc., individually, and of Solectron and its subsidiaries on a
consolidated basis, for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, certified by the
chief financial officer
IV-3
of each of Solectron California Corporation, Solectron Technology, Inc.,
the Seller and Solectron;
(ii) as soon as available and in any event within 90 days after the
end of each fiscal year of Solectron, a copy of the annual report for such
year for Solectron and its subsidiaries, containing financial statements
for such year audited by KPMG Peat Marwick or other independent certified
public accountants of national reputation;
(iii) as soon as available and in any event not later than the tenth
calendar day of each month or, if such day is not a Business Day, the
first Business Day thereafter, a Seller Report as of the previous
Month-End Date;
(iv) on the first Business Day of each calendar week, a report with
respect to Solectron's, Solectron Technology's, and Solectron California's
accounts payable as of the last Business Day of the preceding week, in
form and substance satisfactory to the Administrator, however, such report
will not be required of Solectron if the rating on its Rated Long Term
Debt is Investment Grade;
(v) as soon as possible and in any event within five days after the
occurrence of each Termination Event or event which, with the giving of
notice or lapse of time, or both, would constitute a Termination Event, a
statement of the chief financial officer of the Servicer, the Seller,
Solectron California Corporation, or Solectron Technology, Inc. setting
forth details of such Termination Event or event and the action that the
Seller or Solectron California Corporation, or Solectron Technology, Inc.
as the case may be, has taken and proposes to take with respect thereto;
(vi) promptly after the sending or filing thereof, copies of all
reports that the Servicer, the Seller, Solectron California Corporation,
or Solectron Technology, Inc. or any of their respective subsidiaries
sends to any of its security holders, and copies of all reports and
registration statements that the Seller, Solectron California Corporation,
Solectron, or Solectron Technology, Inc., or any of their respective
subsidiaries files with the Securities and Exchange Commission or any
national securities exchange;
(vii) promptly after the filing or receiving thereof, copies of all
reports and notices that the Seller, Solectron California Corporation, or
Solectron Technology, Inc., Solectron or any Affiliate files under ERISA
with the Internal Revenue Service or the PBGC or the U.S. Department of
Labor or that the Seller, Solectron California Corporation, or Solectron
Technology, Inc., Solectron or any Affiliate receives from any of the
foregoing or from any multiemployer plan (within the meaning of Section
4001(a)(3) of ERISA) to which the Seller, Solectron California
Corporation, Solectron, or Solectron Technology, Inc., or any Affiliate is
or was, within the preceding five years, a contributing employer, in each
case in respect of the assessment of withdrawal liability or an event or
condition which could, in the aggregate, result in the imposition of
liability on the Seller, Solectron California Corporation, Solectron
and/or any such Affiliate in excess of $5,000,000;
IV-4
(viii) at least thirty days prior to any change in the Seller's or
an Originator's name, or any other change requiring the amendment of UCC
financing statements or the filing of new UCC financing statements in
order to maintain the perfection and priority of the security interest
granted pursuant to Section 1.2 of the Agreement, a notice setting forth
such changes and the effective date thereof;
(ix) such other information respecting the Receivables or the
condition or operations, financial or otherwise, of the Seller, Solectron
California Corporation, or Solectron Technology, Inc., Solectron or any of
their respective Affiliates as the Administrator may from time to time
reasonably request;
(x) promptly after the Seller or the Servicer obtains knowledge
thereof, notice of any (a) litigation, investigation or proceeding which
may exist at any time involving any Solectron Party and any Governmental
Authority which, if not cured or if adversely determined, as the case may
be, would have a material adverse effect (i) on the business, operations,
property or financial or other condition of Solectron or any of its
subsidiaries or (ii) upon the ability of Solectron or any of its
subsidiaries to pay any Indebtedness or (iii) upon the Receivables Pool or
(iv) upon the Seller's receipt of or right to receive Collections; or (b)
litigation or proceeding adversely affecting any Solectron Party or in
which the amount involved is $5,000,000 or more and not covered by
insurance or in which injunctive or similar relief is sought or (c)
litigation or proceeding relating to any Transaction Document; and
(xi) promptly after the occurrence thereof, notice of a material
adverse change in the business, operations, property or financial or other
condition of the Seller or any other Solectron Party.
(m) General Restrictions. On and after the Effective Date,
(i) Restricted Payments. the Seller shall not (A) pay or declare any
Dividend, (B) lend or advance any funds, or (C) repay any loans or
advances to, for or from any Solectron Party, or (D) make any payments in
respect of the purchase price of Receivables and Related Assets under the
Purchase and Sale Agreement, except in accordance with clause (o) of this
Exhibit IV and this clause (m). Actions of the type described in the
preceding sentence are herein collectively called "Restricted Payments";
(ii) Types of Permitted Payments. subject to the limitations set
forth in clause (o) below, the Seller may declare and pay Dividends to any
shareholder provided, that payment of such Dividends must comply with
applicable law; and provided, further, that Dividends may not be paid more
frequently than permitted by applicable law;
(iii) Additional Specific Restrictions. the Seller may make
Restricted Payments only out of Collections paid or released to the Seller
pursuant to Sections 1.4(b)(ii) or 1.4(b)(iv) of the Agreement, from the
proceeds of any Purchased Interest, from the original paid in capital of
the Seller, or from other net income of the Seller; provided, however,
that the Seller shall not pay, make or declare;
IV-5
(A) any Dividend if, after giving effect thereto, the Seller's
Tangible Net Worth would be less than $30,000,000;
(B) any Restricted Payment if, after giving effect thereto, a
Termination Event or Unmatured Termination Event shall have occurred
and be continuing; or
(C) any Restricted Payment if, after giving effect thereto,
the Seller would not be Solvent.
(n) ERISA Matters. Solectron shall notify the Administrator as soon
as is practicable and in any event not later than two Business Days after (i)
the institution of any steps by it or any other Person to terminate any Pension
Plan which is not fully funded, unless adequate reserves have been set aside for
the funding thereof, (ii) the failure to make a required contribution to any
Pension Plan if such failure is sufficient to give rise to a lien under section
302(f) of ERISA, (iii) the taking of any action with respect to a Pension Plan
which could result in the requirement that any Solectron Party furnish a bond or
other security to the PBGC or such Pension Plan or (iv) the occurrence of any
other event concerning any Pension Plan which is reasonably likely to result in
a material adverse effect on the business, operations, property or financial or
other condition of any Solectron Party.
(o) Mergers, Acquisitions, Sales, Investments, etc. Solectron shall
cause the Seller not to:
(i) be a party to any merger or consolidation, or directly or
indirectly purchase or otherwise acquire all or substantially all of the
assets or any stock of any class of, or any partnership or joint venture
interest in, any other Person,
(ii) sell, transfer, convey or lease any of its assets other than
pursuant to or the Parallel Purchase Agreement or as expressly permitted
by this Agreement, or
(iii) make, incur or suffer to exist any investment in, equity
contribution to, loan or advance to, or payment obligation in respect of
the deferred purchase price of property from, any other Person, except as
expressly contemplated by this Agreement and, the Purchase and Sale
Agreement and the Parallel Asset Purchase Agreement.
IV-6
EXHIBIT V
TERMINATION EVENTS
Each of the following shall be a "Termination Event":
(a) The Servicer shall fail to deliver the Seller Report pursuant to the
Agreement or the Parallel Purchase Agreement and such failure shall remain
unremedied for five days, or (ii) the Seller shall fail to make any payment
required under the Agreement or the Parallel Purchase Agreement and such failure
shall remain unremedied for two Business Days; or
(b) The Servicer shall fail (i) to transfer to any successor Servicer when
required any rights, pursuant to the Agreement or the Parallel Purchase
Agreement, which the Servicer then has, or (ii) to make any payment required
under the Agreement or the Parallel Purchase Agreement; or
(c) Any representation or warranty made or deemed made by the Seller, the
Servicer or either Sub-Servicer (or any of their respective officers) under or
in connection with the Agreement or any other Transaction Document or any
information or report delivered by the Seller, the Servicer or either
Sub-Servicer pursuant to the Agreement shall prove to have been incorrect or
untrue in any material respect when made or deemed made or delivered; or
(d) The Seller or the Servicer shall fail to perform or observe (i) any
term, covenant or agreement contained in paragraphs (d), (e), (f), (g), (i),
(j), (m), (n) or (o) of Exhibit IV to the Agreement or the Parallel Purchase
Agreement and, in the case of any such failure with respect to paragraphs (i) or
(j) that is solely the result of the termination of the applicable Lockbox
Agreement by Bank of America National Trust and Savings Association, such
failure shall remain unremedied for fourteen (14) days, (ii) any term, covenant
or agreement contained in paragraph (l) of Exhibit IV to the Agreement or the
Parallel Purchase Agreement and such failure shall remain unremedied for five
days, or (iii) any other term, covenant or agreement contained in the Agreement
or the Parallel Purchase Agreement or any other Transaction Document on its part
to be performed or observed and any such failure shall remain unremedied for
thirty (30) days; or
(e) Any Solectron Party shall be in default with respect to any payment
(whether or principal or interest and regardless of amount) in respect of any
Material Indebtedness and such failure shall continue beyond the applicable
grace period specified in the agreement or instrument relating to such Material
Indebtedness or any Solectron Party shall default in any obligation under any
Material Indebtedness and such failure shall result in such Material
Indebtedness being declared to be due and payable prior to the stated maturity
thereof; or
(f) The Agreement or the Parallel Purchase Agreement or any purchase or
any reinvestment pursuant to the Agreement or the Parallel Purchase Agreement
shall for any reason (other than pursuant to the terms the Agreement or the
Parallel Purchase Agreement) (i) cease to create, or the Purchased Interest
under either such agreement shall for any reason cease to be, a valid
V-1
and enforceable first priority perfected undivided percentage ownership interest
to the extent of such Purchased Interest in each Pool Receivable and the Related
Security and Collections and other proceeds with respect thereto, free and clear
of any Adverse Claim or (ii) cease to create with respect to the items described
in Section 1.2(d), or the interest of the Administrator, on its behalf and on
behalf of the Issuer, with respect to such items shall cease to be, a valid and
enforceable first priority perfected security interest, free and clear of any
Adverse Claim; or
(g) Solectron or the Seller shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against Solectron or Seller seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, custodian or other similar official
for it or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of 30 days, or any
of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or Solectron or the Seller shall take any corporate
action to authorize any of the actions set forth above in this paragraph (g); or
(h) As of any Month-End Date on and after the Effective Date, (i) the
average Sales-Based Dilution Ratio for the three months ended on such Month-End
Date shall exceed 9%, (ii) the average Sales-Based Default Ratio for the three
months ended on such Month-End Date shall exceed 4% or (iii) the average
Delinquency Ratio for the three months ended on such Month-End Date shall exceed
6%; or
(i) The sum of the Purchased Interests under the Agreement and the
Parallel Purchase Agreement shall exceed 100% and such condition shall have
continued for a period of five (5) Business Days following the earlier of (x)
the Servicer's knowledge of such condition and (y) notice to the Servicer by the
Administrator or the Parallel Purchase Administrator of the occurrence of such
condition; or
(j) An "Event of Default", as defined in the Solectron Credit Agreement,
shall occur and be continuing, or, if the Solectron Credit Agreement (or the
commitments of the lenders thereunder) has expired, been terminated or is
otherwise not in full force and effect, an "Event of Default" as defined in the
Solectron Credit Agreement, as in effect at the time immediately preceding such
expiration, termination or failure to be in full force and effect, would have
occurred and been continuing if the Solectron Credit Agreement had not so
expired, terminated or failed to be in full force and effect; or
(k) On and after the Initial Purchase Date, the Tangible Net Worth of
Seller shall at anytime be less than $30,000,000; or
V-2
(l) Any Change of Control shall occur or Solectron shall not own, directly
or indirectly, 100% of all issued and outstanding capital stock of the Seller;
or
(m) If Solectron has any Rated Long Term Debt outstanding, the rating
assigned by S&P shall at any time be withdrawn or be less than "BB"; or
(n) A Purchase and Sale Termination Event shall have occurred.
V-3
SCHEDULE I
CREDIT AND COLLECTION POLICY
Supplied by Solectron Corporation, Solectron California Corporation and
Solectron Technology, Inc.
I-1
SCHEDULE II
LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
Lock-Box Bank Lock-Box Account
Bank of America National Trust 1584
and Savings Association
First Union National Bank 60862
SCHEDULE III
TRADE NAMES
None
II-2
SCHEDULE IV
PERMITTED LIENS
None
ANNEX A
FORM OF LOCK-BOX AGREEMENT
AGREEMENT RELATING TO LOCKBOX SERVICES
This Agreement is entered into as of September __, 1997 among Solectron
California Corporation ("SCC"), Solectron Corporation ("Solectron" and together
with SCC, the "Originators"), Solectron Funding Corporation ("Seller"),
Receivables Capital Corporation ("Purchaser"), Bank of America National Trust
and Savings Association, as administrator for Purchaser ("Administrator"), and
Bank of America National Trust and Savings Association ("Bank") with respect to
the following:
A. Solectron and Bank have agreed to the Standard Terms and Conditions, a
copy of which is attached as Exhibit A and incorporated herein by reference (the
"Standard Terms and Conditions"), relating to remittance processing services to
be performed by Bank ("Remittance Processing Service") in relation to the checks
and other payment instruments mailed to the United States Post Office address or
addresses ("Lockbox Address or Addresses") assigned to Solectron (collectively,
the "Payments") from time to time received or deposited in [Solectron's] Account
No. _____________ with Bank (the "Account").
B. Each of the Originators has assigned and/or may hereafter assign to
Seller, ad Seller has assigned and/or may hereafter assign to Purchaser and
Administrator an undivided percentage interest in, and has granted to
Administrator for its benefit and the benefit of Purchaser a security interest
in, certain accounts, chattel paper instruments or general intangibles
("Receivables") and all proceeds thereof, including the Payments.
C. Each Originator, Seller, Purchaser, Administrator and Bank are entering
into this Agreement to provide for the assignment of the Account to
Administrator, for its benefit and the benefit of Purchaser, and the disposition
of net proceeds of Payments deposited in the Account.
Accordingly, each Originator, Purchaser, Administrator and Bank agree as
follows:
1. Assignment of Account:
(a) Each Originator hereby assigns and transfers to Seller, and Seller
hereby assigns and transfers to Administrator, for its benefit and the benefit
of Purchaser, and grants to Administrator, for its benefit and the benefit of
Purchaser, a security interest in, the Account, all Payments and all other
moneys deposited in the Account from time to time. Subject to the terms hereof,
Administrator, for its benefit and the benefit of Purchaser, shall have
exclusive dominion and control over the Account.
(b) Bank hereby acknowledges receipt of notice of the ownership and
security interest of Administrator, for its benefit and the benefit of
Purchaser, in the Payments, the
A-1
Account and the amounts from time to time on deposit therein and agrees that the
Account shall be maintained for the benefit of Administrator, on its behalf and
on behalf of Purchaser, on the terms provided herein).
(c) The Account shall be entitled "Solectron for the benefit of Bank of
America, as Administrator."
(d) Administrator, on behalf of itself and Purchaser, hereby authorizes
Bank to transfer balances in the Account to each Originator in accordance with
instructions to Bank from Solectron, and hereby authorizes Solectron (in its
capacity as servicer of the Receivables) to accept such transfers and to give
such instructions prior to the Activation Period. The "Activation Period" means
the period of time commencing on the date [two] Business Days after Bank's
receipt of a written notice from Administrator in the form of Attachment I (the
"Notice"). Administrator will simultaneously provide a copy of the Notice to
Solectron.
(e) Bank has sole and exclusive access to items mailed to the Lockbox
Address(es).
2. Bank is hereby authorized (and, in the case of clauses (a), (b) and (e)
below, hereby agrees):
(a) to perform the Remittance Processing Service and to follow its usual
operating procedures for the handling of any Payments, in accordance with
the
Standard Terms and Conditions, as modified by this Agreement;
(b) to charge the Account for all returned Payments, service charges, and
other fees and charges associated with the Remittance Processing Service and
this Agreement;
(c) to follow its usual procedures in the event the Account or any Payment
should be or become the subject of any writ, levy, order or other similar
judicial or regulatory order or process ("Order") to comply with such Order; and
(d) at all times prior to the Activation Period, to transfer all collected
and available balances in the Account to [Solectron] Account No. __________ at
______________ (or such other account as [Solectron] may designate by written
notice to the Bank and Administrator), and, notwithstanding anything to the
contrary herein or in the Standard Terms and Conditions, during the Activation
Period (i) to refrain from transferring any balances at the discretion of the
Company and (ii) to transfer all collected and available balances in the Account
to such account as Administrator may designate by written notice to Bank)
pursuant to Administrator's instructions. Funds are not available if, in the
reasonable determination of Bank, they are subject to a hold, dispute or legal
process preventing their withdrawal. Company or Administrator, as applicable,
will give Bank reasonable advance written notice of any change in the
instructions.
A-2
3. If the balances in the Account are not sufficient to pay Bank for any
returned check, each Originator agrees to pay Bank on demand the amount due
Bank.
(a) If the balances in the Account are not sufficient to compensate Bank
for any fees or charges due Bank in connection with the Remittance Processing
Service or this Agreement, each Originator agrees to pay Bank on demand the
amount due Bank.
4. Each Originator hereby authorizes Bank, without prior notice, from time to
time to debit any other account either Originator may have with Bank for the
amount or amounts due Bank under subsection 3(a) or 3(b). Neither Purchaser nor
Administrator shall be responsible for payment of any such amount.
(a) Bank agrees it shall not offset against the Account, except as
permitted under this Agreement, until this Agreement has been terminated
pursuant to subsection 5(d) hereof or by agreement of the parties.
5. Termination of this Agreement shall be as follows:
(a) Bank may terminate this Agreement upon 30 days' prior written notice to
each Originator, Seller and Administrator. Purchaser or Administrator may
terminate this Agreement upon 30 days' prior written notice by Administrator to
each Originator, Seller and Bank. Neither of the Originators nor Seller may
terminate this Agreement or the Remittance Processing Service except with the
written consent of Administrator and upon 30 days' prior written notice to Bank
and Administrator.
(b) Notwithstanding subsection 4(a), Bank may terminate this Agreement at
any time by at least one Business Day's prior written notice to each Originator,
Seller and Administrator if (i) either Originator or Seller breaches any of the
terms of this Agreement, any other agreement with Bank or any agreement
involving the borrowing of money or the extension of credit; (ii) either
Originator or Seller liquidates, dissolves, merges with or into or consolidates
with another entity or sells, leases or disposes of a substantial portion of its
business or assets; (iii) either Originator, or Seller terminates its business,
fails generally or admits in writing its inability to pay its debts as they
become due; any bankruptcy, reorganization, arrangement, insolvency, dissolution
or similar proceeding is instituted with respect to either Originator or Seller;
either Originator, or Seller makes any assignment for the benefit of creditors
or enters into any composition with creditors or takes any action in furtherance
of any of the foregoing; or (iv) any material adverse change occurs in each
Originator's or Seller's financial condition, results of operations or ability
to perform its obligations under this Agreement. Each Originator and Seller
shall promptly give written notice to Bank and Administrator of the occurrence
of any of the foregoing events with respect to itself.
(c) Upon any termination of this Agreement pursuant to subsection 4(a) or
4(b) hereof, and subject to Section 13 hereof, (i) each Originator shall
promptly arrange for Payments received at the Lockbox Address(es) or otherwise
in or for deposit to the Account to
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be forwarded to another bank acceptable to Administrator and processed pursuant
to an agreement acceptable to Administrator, and (ii) Bank shall no longer be
required to process Payments, but subject to payment in advance of Bank's
standard charges for such service, shall forward all Payments then held by Bank
and all mail thereafter received at the Lockbox Address to such address or
account as Administrator may direct. Otherwise the provisions of this Agreement
shall remain in effect until terminated pursuant to subsection 5(d) or by
agreement among the parties.
6. Bank will not be liable to either Originator, Seller, Purchaser or
Administrator for any expense, claim, loss, damage or cost ("Damages") arising
out of or relating to its performance under this Agreement other than those
Damages which result directly from its acts or omissions constituting negligence
or willful misconduct, subject to the limits in subsection 5(b).
(a) Bank's liability is limited to direct money Damages actually incurred.
In no event will Bank be liable for any special, indirect, consequential or
exemplary damages or for lost profits.
(b) Bank will be excused from failing to act or delay in acting, and no
such failure or delay shall constitute a breach of this Agreement or otherwise
give rise to any liability of Bank, if (i) such failure or delay is caused by
circumstances beyond Bank's reasonable control, including but not limited to
legal constraint, emergency conditions, action or inaction of governmental,
civil or military authority, fire, strike, lockout or other labor dispute, war,
riot, theft, flood, earthquake or other natural disaster, breakdown of public or
private or common carrier communications or transmission facilities, equipment
failure, or act, negligence or default of either Originator, Seller, Purchaser
or Administrator or (ii) such failure or delay resulted from Bank's reasonable
belief that the action would have violated any guideline, rule or regulation of
any governmental authority. Bank agrees to give each Originator, Seller and
Administrator prompt notice of any actual or anticipated failure or delay
resulting from any of the foregoing but any failure of Bank to give such notice
shall not affect Bank's rights (or the limitation of its liability) under this
subsection 5(b) or 5(c).
(c) Administrator shall notify Bank promptly in writing when Purchaser has
no further ownership interest (or commitment to acquire any interest) in the
Receivables and all of each Originator's and Seller's, obligations have been
paid in full, and this Agreement shall automatically terminate upon Bank's
receipt of such notice.
7. Each Originator shall indemnify Bank against, and hold it harmless from, any
and all liabilities, claims, costs, expenses and damages of any nature
(including but not limited to allocated costs of staff counsel, other reasonable
attorney's fees and any fees and expenses incurred in enforcing this Agreement)
in any way arising out of or relating to disputes or legal actions concerning
Bank's provision of the Remittance Processing Service, this Agreement, the
Lockbox Addresses or any Payment. This Section does not apply to any cost or
damage attributable to the gross negligence or intentional misconduct of Bank.
Each Originator's obligations under this Section shall survive termination of
this Agreement.
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8. The Originators and Seller each represents and warrants to Bank, Purchaser
and Administrator, that (i) each Acceptable Payee has authorized Payments
payable to it to be credited to the Account; (ii) this Agreement constitutes its
duly authorized, legal, valid, binding and enforceable obligation; (iii) the
performance of its obligations under this Agreement and the consummation of the
transactions contemplated hereunder will not (A) constitute or result in a
breach of its certificate or articles of incorporation, by-laws or partnership
agreement, as applicable, or the provisions of any material contract to which it
is a party or by which it is bound or (B) result in the violation of any law,
regulation, judgment, decree or governmental order applicable to it; and (iv)
all approvals and authorizations required to permit the execution, delivery,
performance and consummation of this Agreement and the transactions contemplated
hereunder have been obtained.
(a) The Originators and Seller each agrees that it shall be deemed to make
and renew each representation and warranty in subsection 7(a) on and as of each
day on which it uses the Remittance Processing Service.
9. The Originators and Seller each represents and warrants that it has not
assigned or granted a security interest in the Account or any funds now or
hereafter deposited in the Account, except to Seller (in the case of each
Originator and to Purchaser and Administrator.
10. The Originators and Seller each agrees that:
(a) Except as permitted under Section 2(d), it cannot, and will not,
withdraw any monies from the Account until such time as Administrator advises
Bank in writing that Purchaser and Administrator no longer claim any interest in
the Account and the monies deposited and to be deposited in the Account; and
(b) It will not permit the Account to become subject to any other pledge,
assignment, lien, charge or encumbrance of any kind, nature or description,
other than ownership and security interests of Purchaser, and Administrator on
its behalf, hereunder and as referred to herein.
11. Purchaser and Administrator each acknowledges and agrees that Bank has the
right to charge the Account from time to time, as set forth in this Agreement,
and the account agreement, as amended from time to time, and that Purchaser and
Administrator have no right to the sums so withdrawn by Bank.
12. Each Business Day (as defined below), Bank will prepare a package of
materials for each Lockbox Address which will include, but is not limited to,
any Payments not processed in accordance with the set-up documents, invoices,
any other material received at the Lockbox Address(es) and information regarding
the deposit for such Business Day. For purposes hereof, "Business Day" shall
mean each Monday through Friday, excluding bank holidays.
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(a) Bank will send the materials to the address specified below for
Solectron, with a copy of the deposit advice to the address specified below for
Administrator. In addition to the original statement which will be provided to
Solectron, if requested by Administrator, Bank will provide Administrator with a
duplicate statement.
13. Each Originator agrees to pay to Bank, upon receipt of Bank's invoice, all
costs, expenses and attorneys' fees (including allocated costs for in-house
legal services) incurred by Bank in connection with the preparation and
administration (including any amendments) and enforcement of this Agreement and
any instrument or agreement required hereunder, including but not limited to any
such costs, expenses and fees arising out of the resolution of any conflict,
dispute, motion regarding entitlement to rights or rights of action, or other
action to enforce Bank's rights in a case arising under Xxxxx 00, Xxxxxx Xxxxxx
Code.
14. Notwithstanding any of the other provisions in this Agreement, in the event
of the commencement of a case pursuant to Xxxxx 00, Xxxxxx Xxxxxx Code, filed by
or against either Originator or Seller, or in the event of the commencement of
any similar case under then applicable federal or state law providing for the
relief of debtors or the protection of creditors by or against either Originator
or Seller, Bank may take or omit to take any action as Bank reasonably deems
necessary in order to comply with all applicable provisions of governing
statutes, and shall not be liable to the other parties, and each of the other
parties hereby agrees not to assert any claim against Bank, for any Damages
arising from such action or omission.
15. This Agreement may be amended only be a writing signed by each Originator,
Seller, Purchaser, Administrator and Bank; except that Bank's charges are
subject to change by Bank upon 30 days' prior written notice to each Originator
and Seller.
16. This Agreement may be executed in counterparts; all such counterparts shall
constitute but one and the same agreement.
17. Any written notice or other written communication to be given under this
Agreement shall be addressed to each party at its address set forth on the
signature page of this Agreement or to such other address as a party may specify
in writing. Except as otherwise expressly provided herein, any such notice shall
be effective upon receipt.
18. This Agreement controls in the event of any conflict between this Agreement
and or any other document or written or oral statement. This Agreement
supersedes all prior understandings, writings, proposals, representations and
communications, oral or written, of any party relating to the subject matter
hereof.
19. Neither of the Originators nor Seller may assign any of its rights or
obligations under this Agreement without the prior written consent of Bank. Upon
[30 days] prior written notice to Bank, Purchaser may assign its rights and
interests under this Agreement to any assignee of Purchaser's interest in the
Receivables. Administrator may assign its rights, interests and obligations
under this Agreement to any successor administrator for Purchaser. Administrator
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agrees to give prompt written notice to Bank of any such assignment by Purchaser
or Administrator, but no failure to give or delay in giving such notice shall
impair the assignee's interest in the Account or, on and after the giving of
such notice, the rights of the assignee hereunder.
20. Bank hereby agrees that it will not institute, or join any other person or
entity in instituting, any case pursuant to Xxxxx 00, Xxxxxx Xxxxxx Code, or any
similar case under then applicable state or federal law providing for the relief
of debtors or the protection of creditors, (a) against Purchaser prior to the
date which is one year and one day after payment of all commercial paper or
other rated securities now or hereafter issued by Purchaser or (b) against
Seller prior to the date which is one year and one day after the date on which
Purchaser has no further ownership interest (or commitment to acquire any
interest) in the Receivables and all of Seller's obligations which are secured
by the Receivables, the Payments and the Account are paid in full. This Section
20 shall survive any termination of this Agreement.
21. This Agreement shall be interpreted in accordance with Illinois law without
reference to Illinois principles of conflicts of law.
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IN WITNESS WHEREOF, the parties hereto have executed this agreement
by their duly authorized officers as of the day and year first above written.
Solectron Corporation Address for notices:
("Solectron" and "Originator")
000 Xxxxxxxxx Xxxxx
By: Building 5
---------------------------
Name: Xxxxxxxx, Xxxxxxxxxx 00000
-------------------------
Title: Attention: Treasurer
------------------------
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Solectron California Corporation Addresses for notices
("Originator")
000 Xxxxxxxxx Xxxxx
By: Building 5
---------------------------
Name: Xxxxxxxx, Xxxxxxxxxx 00000
-------------------------
Title: Attention: Treasurer
------------------------
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Solectron Funding Corporation Address for notices:
("Seller")
000 Xxxxxxxxx Xxxxx
By: Building 5
----------------------------
Name: Xxxxxxxx, Xxxxxxxxxx 00000
--------------------------
Title: Attention: Treasurer
--------------------------
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Receivables Capital Corporation Address for notices:
("Purchaser")
c/o Administrator at its
address shown below
By: c/o Merrill Xxxxx Money Markets, Inc.
----------------------------
Name: World Financial Center, North Tower
----------------------------
Title: 000 Xxxxx Xxxxxx - 11th Floor
----------------------------
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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Bank of America National Trust Address for notices:
and Savings Association
("Administrator") Asset Securitization Group
000 Xxxxx XxXxxxx Xxxxxx
By: Xxxxxxx, Xxxxxxxx 00000
--------------------------
Name: Attention: Asset Securitization Group
--------------------------
Title: Telephone: (000) 000-0000
--------------------------
Facsimile: (000) 000-0000
Bank of America National Trust
and Savings Association
("Bank")
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
S-2
EXHIBIT A
TO THREE PARTY AGREEMENT RELATING
TO LOCKBOX SERVICES
STANDARD TERMS AND CONDITIONS
The Lockbox Service involves processing checks that are received at a Lockbox
Address. With this Service, Company instructs its customers to mail checks it
wants to have processed under the Service to the Lockbox Address. Banks picks up
mail at the Lockbox Address according to its mail pick-up schedule. Banks will
have unrestricted and exclusive access to the mail directed to the Lockbox
Address. Bank will provide Company with the Lockbox Service for a Lockbox
Address when Company has completed and Bank has received Bank's then current
set-up documents for the Lockbox Address.
If Bank receives any mail containing Company's Lockbox number at Bank's lockbox
operations location (instead of the Lockbox Address), Bank may handle the mail
as if it had been received at the Lockbox Address.
PROCESSING
Bank will handle checks received at the Lockbox Address according to the
applicable deposit account agreement, if the checks were delivered by Company to
Bank for deposit to the Account, except as modified by this Agreement.
Bank will open the envelopes picked up from the Lockbox Address and remove the
contents. For the Lockbox Address, checks and other documents contained in the
envelopes will be inspected and handled in the manner specified in the Company's
set-up documents. Bank captures and reports information related to the lockbox
processing, where available, if Company has specified this option in the set-up
documents. Banks will endorse all checks Bank processes on Company's behalf.
If Bank processes an unsigned check as instructed in the set-up documents, and
the check is paid, but the account owner does not authorize payment, Company
agrees to indemnify Bank, the drawee bank, (which may include Bank) and any
intervening collection bank for any liability or expense incurred by such
indemnitee due to the payment and collection of the check.
If Company instructs Bank not to process a check bearing a handwritten or typed
notation "Payment in Full" or words of similar import on the face of the check,
Company understands that Bank has adopted procedures designed to detect checks
bearing such notations; however, Bank will not be liable to Company or any other
party for losses suffered if Bank fails to detect checks bearing such notations.
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RETURN CHECK
Unless Company and Bank agree to another processing procedure, Bank will reclear
a check once which has been returned and marked to "Refer to Maker," "Not
Sufficient Funds:" or "Uncollected Funds." If the Check is returned for any
other reason or if the check is returned a second time, Bank will debit the
applicable Account and return the check to Company. Company agrees that Bank
will not send a returned item notice to Company for a returned check unless
Company and Bank have agreed otherwise.
ACCEPTABLE PAYEES
For the Lockbox Address, Company will provide to Bank the names of Acceptable
Payees ("Acceptable Payee" means Company's name and any other payee name
provided to Bank by Company as an acceptable payee for checks to be processed
under the Lockbox Service). Bank will process a check only if it is made payable
to an Acceptable Payee and if the check is otherwise processable. Company
warrants that each Acceptable Payee has authorized checks payable to it be
credited to the Account Company designates for the Lockbox Service. Bank may
treat as an acceptable Payee any variation of any Acceptable Payee's name that
Bank deems to be reasonable.
CHANGES TO PROCESSING INSTRUCTIONS
Company may request Bank orally or in writing to make changes to the processing
instructions (including changes to Acceptable Payees) for any Lockbox Address by
contacting its Bank representative . Bank will not be obligated to implement any
requested changes until Bank has actually received the requests and had a
reasonable opportunity to act upon them. In making changes, Bank is entitled to
rely on instructions purporting to be from Company.
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ATTACHMENT I
MULTI PARTY LOCKBOX
Bank of America National Trust and Savings Association
as Administrator
To: Bank of America
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Re: Solectron Corporation
Account No.
Ladies and Gentlemen:
Reference is made to the Lockbox Agreement dated September __, 1997 (the
"Agreement") among Solectron Corporation, Solectron California Corporation,
Solectron Funding Corporation, Receivables Capital Corporation, Bank of America
National Trust and Savings Association, as administrator, and you regarding the
above-described account (the "Account"). In accordance with Section 1(d) and
2(d) of the Agreement, we hereby give you notice of our exercise of control of
the Account and we hereby instruct you to transfer funds to Administrator's
account or otherwise in accordance with Administrator's instructions as follows:
[insert instructions].
Very truly yours,
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION
as Administrator
By:
------------------------
Name:
------------------------
Title:
------------------------
